“Lucy’s going to pull the football out from under Charlie Brown again. How many times do we have to see this?” Larry McDonald, head of U.S. macro strategy at Societe Generale, said Wednesday.
McDonald points to the Fed’s history of pushing back rate hike expectations in June and again in September as evidence that a similar situation will play out.
Key challenges in considering a rate rise include a stronger U.S. dollar, falling commodities prices and trouble in emerging markets, McDonald said. He believes that when the time comes to assess monetary policy, the same problems that plagued the market in August will return.
“That’s impacted the Fed’s policy path, the path has been vetoed by economic risk outside the United States and that’s probably going to play out again,” he said. “That brings back credit risk, then we get a leg down in the market, then once again the Fed gets put in a box.”