The Fed does need to tighten, though

I have been emphasizing that the monetary policy backdrop is not yet a negative for equities. If anything, I have understated the point, although it would probably be wise to avoid compounding the error at this point in the process.

A key issue here it that the Fed can easily raise the funds rate, even by more than is priced, without signaling that it has become intolerant of above-trend growth.
 
Of course, the flip side of this same coin is that rates do have to go up. And I elaborate on that in this brief note. FH-180114