Over the last few week’s I have discussed the post-election surge in the market based on rather optimistic outlooks as opposed to the technical underpinnings that currently exists.

As I specially stated in last weekend’s newsletter entitle “Dow 20,000”:

“If this market rally seems eerily familiar, it’s because it is. If fact, the backdrop of the rally reminds me much of what was happening in 1999.

1999

• Fed was hiking rates as worries about inflationary pressures were present.
• Economic growth was improving 
• Interest and inflation were rising
• Earnings were rising through the use of “new metrics,” share buybacks and an M&A spree. (Who can forget the market greats of Enron, Worldcom & Global Crossing)
• Stock market was beginning to go parabolic as exuberance exploded in a “can’t lose market.”

If you were around then, you will remember.”

Of course, this is what we were told this week by Janet Yellen, and the Fed, as they finally lifted rates for the first time in 2016 with the expectation the econLance Roberts is a chief portfolio strategist and economist for Clarity Financial.omy will continue to perform “well,” the current rate is only modestly below the “neutral” rate, and the rate hike is a vote of confidence in the economy.

Or course, the irony is when she stated the Fed is expecting to hike rates 3-times next year.

Considering their previous track record for lifting rates, it is astonishing the market continues to “buy” the nonsense.

As I penned last weekend, the ramp up in the market against a backdrop of a “fear” of rising inflationary pressures, when none really exists, is a dangerous brew for the markets.

With interest rates and the U.S. dollar already heavily front running the Fed in the tightening of monetary policy, there is a very high risk of an “accident” occurring which takes investors by surprise. 

Lance Roberts is a chief portfolio strategist and economist for Clarity Financial.