Rate hike vs. rate hike cycle

Recently, there has been a parade of regional Fed presidents calling for a serious consideration of a rate hike:

• Boston Fed's Rosengren, who appears to have becoming more hawkish after being a dove
• Richmond Fed`s Lacker
• San Francisco Fed`s Williams
• Kansas City Fed's George
• Atlanta Fed's Lockhart

The hawkishness of regional presidents is no surprise. Bloomberg reported that the boards of eight of 12 regional Feds had pushed for a rate hike.

The hawkish tone by regional Feds has been offset by more the dovish views of Fed governors. Fed governor Daniel Tarullo told CNBC last week that he was open to rate hikes in 2016, but he wanted "to see more inflation". Today. uber-dove Fed governor Brainard stayed with a dovish tone in her speech stating that the "asymmetry in risk management in today's new normal counsels prudence in the removal of policy accommodation".

The market's intense focus of when the Fed moves rates is the wrong question to ask. Rather than ponder the timing of the next rate hike, the better questions to ask is, "What is the trajectory of rate normalization for 2016 and 2017 and what are the investment implications?"

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