What Happened The Last Time The Fed Was "Patient?"

The most recent supercharged U.S. stock market rally when engineered by Wall Street's excitement around the word "patient" in the most recent Fed minutes, which replaced "considerable time" describing when they would raise rates. A look at history shows traders should be slightly less ebullient over this choice of words.

Every Fed committee team is different, but the last time the Fed substituted these (exact) terms for one another was in January 2004. They continued to use "patient" in March 2004 (the next meeting), and three months later, bang, the first rate hike arrived:

If this is the trajectory the Fed plans on using in 2015, get ready for turbulence. The dollar is going to strengthen against many currencies (see Japanese yen), and this new world built on easy money will have to finally come to terms with interest rates above 0.0%.

With commodity prices in free fall and inflation figures well below the Fed's 2% target, I think all it will take for the Fed to reverse course is a significant plunge in the S&P 500. What happens from there, no one knows, but it certainly appears the Fed has painted itself into a corner.