CONFIDENCE

It's been said that banks and other financial firms benefit from higher interest rates.

Well, nearly all the talk today after Friday's job number, headlines like this one from Barron's are common: "Job Number Add Up To Rate Hike." In other words, what was a needlessly protracted  media hand-wringing circus about rising interest rates, is now an absolute certainty owing to 0.1% improvement in the job number as it went from 5.1% to 5.0%.

There must be an awful lot of magic in that one-tenth of percent. Charles Schwab's stock price jumped nearly 6% based on the news you can bet bankers love. At the opposite pole are the capital intensive industries like utilities.

As a result you can expect utilities to get a fair amount of heat (no pun intended) in the media as their stock prices sink some more, though they have been going down for a while. There is an old Wall Street bromide that the market discounts the future. That's a two-way street. The future is not always up.

The  Fed's footprint, however, is far deeper than just this rate hike if it happens next month, as Barron's points out. Just last week Fed Chair Janet Yellen openly expressed concern about bank lending policies, however she tried to ensconce it in Fed speak. Yellen was suggesting tighter Federal scrutiny of bank lending.

Yet a recent Fed survey of  loan officers and their lending showed that they remain tighter than before the 2008-09 financial debacle started. According to one report, the U.S. is currently 12th in the world in creating new businesses. Regulation and scrutiny have their not-always visible costs.

Higher interest rates usually bring with them a stronger dollar, something U.S. exporters will hardily  embrace. Speculation in the U.S. dollar before Friday's announcement hit its highest level in nearly two months. Cash will likely leave the market as higher bond yields compete for it. We've already written about the stock buy back situation.

According to one report  today on MarketWatch, "U.S. corporations, meanwhile, are painfully aware of the adverse impact of a firm dollar. Goldman Sachs economists reviewed transcripts of conference calls from 44 companies and concluded that the continued strength of the greenback is among the themes most often discussed this quarter, along with divergence between consumer and industrials sectors, inflation, and buybacks."

This administration just stuck to the COLA crowd again, postponing any cost of living increase for 2016 based on the Fed's inability to locate any inflation. Yet several big firms, Costco, Pepsi and BigMac, to name a few, mentioned concerns about rising wages in their recent earnings reports. Congress just raised the debt ceiling, most likely creating more fixed-cost obligations not so easily swept under the higher interest rate carpet.

There is also something nearly as abstract as those Fed numbers--confidence. That's something we're going to find out more about soon enough.