This week the Federal Reserve hiked interest rates again. That's two times in as many quarters. Back in the day, the markets would have swooned. This week they did the opposite. What gives?

The short answer is investors believe both the economy and inflation are beginning to accelerate, so the Fed has every right to reduce the gas and ease its foot off the monetary pedal. There is, after all, no need to keep interest rates at historically low levels at this point.

That's good news, after buoying both the economy and the financial markets through several years of anemic growth and worries over deflation. It is one explanation for why the stock market has climbed to record highs. Another would be that with Donald Trump in the White House and Republicans a majority in Congress, most investors believe only good things are ahead of us on the economic front.

So tell me something I didn't know. Well, for starters these interest rate rises (with more to come) signal a new economic era in this country and possibly the world. After a race to the bottom in bond yields worldwide, our central bank has now reversed course. It is only a matter of time, I believe, before the rest of the world's central bankers follow suit.

Historically, rising interest rates have provided headwinds for the stock markets. Looking back, about the best that can be said was that stocks do OK for the first two years in a rising rate environment, as long as interest rates rise gradually and each rise is moderate. Call it the "goldilocks" version of the economy where higher rates are offset by greater growth and moderate inflation.

Over time, even that scenario usually comes unglued as economies begin to overheat; inflation climbs and bankers need to become even more hawkish to subdue these animal spirits. Normally, the result of this rate rising is a recession, sometimes mild, sometimes not, depending on how well a central bank can predict the economic future.

At this point, you may realize that managing an economy as large as ours (no never mind managing all the world's economies) is definitely an art and not a science. In times past, central bankers have gotten it very wrong (and sometimes right), but not without a lot of luck thrown in for good measure.

Why the lesson on rising rates? Because from here on out the main risk to the economy and the stock market is not Donald Trump. It is interest rates. Thanks to the Fed, we avoided another Great Depression eight years ago. Since then, with no help from the Federal government, they have single-handedly steered the economy back to a recovery. There is no reason to doubt their abilities.

But Janet Yellen would be the first to admit that she and her board of governors are not infallible. They are feeling their way through this process of normalization. That's financial-speak for disengaging from an overly heavy hand on the economic throttle. It is a process of turning over some of the responsibilities for economic growth to both the free markets and, hopefully, a more responsive government.

So far the markets approve of the way the Fed has handled the first two rate hikes. But it is early days. We have at least two more such hikes waiting in the wings this year. The risk is that there may be more, or that the size of each hike grows. Let's hope that they get it right.

It was late, "skinny," and guaranteed to send Washington lawmakers up a wall.  President Trump's first crack at a budget, released on Thursday, makes drastic cuts to many sacrosanct departments and programs while boosting spending in others.

If you haven't strapped in quite yet, now is the time to do so. The president's 53-page budget (less than half of his predecessor's lean, 134 pages) makes dramatic cuts to departments such as the Environmental Protection Agency (minus-31 percent) and the State Department (minus-28 percent), while increasing defense spending by $54 billion.

Areas that would also be hit hard were foreign aid, grants to multilateral development agencies such as the World Bank and United Nation's climate change initiatives. Clearly, "America First" was front and center in making these decisions. Here at home, renewable energy research and carbon dioxide emissions reductions would also be jettisoned, if the president gets his way.

The Agricultural Department, a bastion of American protectionism, was cut by 21 percent. It would see loans and grants for wastewater slashed, headcount reduced, and a program that gives U.S. farmers tax credits by donating crops for overseas food aid would disappear.

Nineteen organizations that count on federal funds for support such as public broadcasting and the arts would cease completely. Home heating subsidies, clean-water projects and some job training would also go by the wayside. The Housing Department's community development grants, along with 20 Education Department programs, including some funding programs for before and after-school programs, felt the ax. Anti-poverty programs were targeted as well.

In contrast, defense spending will be boosted by $54 billion, money for veterans would increase 6 percent and the White House is asking for a $1.5 billion down payment for the building of Trump's "Great Wall." In many ways, Trump's budget looks like a typical GOP blueprint but there are some differences.

For example, Trump wants to strip infrastructure funding from federal agencies, largely the purview of the Department of Transportation (highways, bridges and airports) and the Army Corp of Engineers, which takes care of the nation's inland waterways. Congress controls where that money is spent. We are all aware that historically, a large part of government spending programs is simply an exercise in legal bribery.

Each congressman and senator gets their "taste," depending on how powerful they are and how good they are horse-trading in the cloak room. Bridges to nowhere, choice contracts to favored construction companies — the litany of kickbacks, waste, and cost overruns go hand-in-hand with what we know as government spending.

Here comes Trump. By taking the purse strings away from Congress, he intends on keeping control of how much gets spent on what (and who benefits). Trump is throwing down the gauntlet to the business-as-usual crowd of Washington politicians on both sides of the aisle.

The ink isn't even dry and already the politicians of both parties are "outraged," "concerned," or "doubtful" in commenting about the White House budget proposals. In truth, presidential budgets are simply a "wish list" and should be taken as such. However, once again, the new president is hell bent on fulfilling his campaign promises.

I would expect Republicans will support the president's budget in theory but when it gets down to the nitty gritty, they, like the Democrats, will make sure that business remains "as usual" unless the new president can out-Trump them.

The GOP's plan to repeal and replace the Affordable Care Act was introduced this week.  As one might expect, the Republican Party's long-awaited plan was met with a firestorm of protests from just about every conceivable lobbying group. That's exactly what one should expect, given that there is so much at stake.

Headlines throughout the week warned that if the plan were passed in its present form, health-care premiums could rise by 30 percent or more. Seniors could pay far more for coverage under the new plan, while between 6 million and 10 million people would lose their health insurance coverage altogether. The poor would get short shrift, while the wealthy would benefit most.

The new plan dubbed "The American Health Care Act," (if all goes as planned) will be rolled out in three phases under a budgetary process that would allow Republicans to pass the bill through a simple majority in the Senate. The problem is that although Republicans are unanimous on the need to repeal the Affordable Care Act (ACA), the party is divided in how to replace it.

Readers might recall that after the landslide Republican victory in the general election, many Americans were worried that Obamacare would be abolished altogether. The doomsday crowd is convinced that the country's health care insurance coverage will go back to the way things were prior to the ACA. I argue that it is too late for that.

Regardless of what you may think of President Obama, he and the Democratic Party set this nation on a new course. It will, in my opinion, result in universal health-care coverage for all.

"But look at what the GOP is proposing," argue the critics.

My answer is that it is early days and the legislation in its present form will not survive. The Senate (including many moderate Republicans) recognizes that there are deep flaws in Speaker Ryan's plan. But some changes are necessary; otherwise the present program will simply sink further into disrepair.

Please remember, however, that even Barak Obama, in rolling out the Affordable Care Act, conceded that the legislation was not perfect. He fully expected revisions and amendments to the original act. Unfortunately, thanks to a partisan Congress, those amendments never took place. Instead, the opposition simply demanded a repeal of Obamacare, but a funny thing happened on the way to the forum. Uninsured Americans actually saw the benefit of government-sponsored health care, regardless of its imperfections.

Remember, too, that in its present form, the House bill hands over huge benefits to those with the highest income (the one percent) at the expense of the very people who voted for our new president — older blue-collar whites. At least half of Trump's constituency came from white voters without college degrees and the House bill hurts them in multiple ways.

Under Obamacare, in 20 of the 30 states Trump won, non-college whites gained more than any other group. The number of uninsured noncollege white folk fell by 39 percent. Older whites, above the age of 45, provided 56 percent of Trump's vote. This group will be especially hard-hit if House Republicans get their way. They won't.

Four Republican Senators have already gone on record opposing the House bill's Medicaid provisions.  Now that the ball is in their court, I believe Republican lawmakers will soon discover (if they haven't already) that replacing the plan will not be that easy.

And whatever the plan that is finally passed in Washington, D.C., it too will be changed and amended for years to come. Similar to the evolution of Social Security from 1934 into the 1960s, the American version of universal health care will be a process of trial and error until we get it right. And make no mistake, we will get it right. All it requires is patience.

Bill Schmick is registered as an investment advisor representative and portfolio manager with Berkshire Money Management (BMM), managing over $200 million for investors in the Berkshires.  Bill's forecasts and opinions are purely his own. None of the information presented here should be construed as an endorsement of BMM or a solicitation to become a client of BMM. Direct inquiries to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com.

What a week for stock investors! All the main averages and most of the minor indexes registered historic highs. No question, Donald Trump has been good for the markets. The question is when will investors begin to take profits?

Calling a top (or a bottom) in the markets is notoriously difficult. Granted, over the years I have been lucky and managed to catch a turn or two once or thrice. As readers know, once we hit 2,330 on the S&P 500 Index, I expected and still do expect some profit-taking. That doesn't mean you should panic nor do anything more than raise a little cash.

My strategy is to re-employ that cash as we pull back. The timing of such a move is always more of an art than a science. Think of it as a process. Sell a little today, a little more tomorrow, and so on. I'm not looking for a big pullback, maybe 4-5 percent. After the market declines, use the same kind of technique to buy back stock. But don't go overboard because I believe the Trump Rally still has legs.

What, you might ask, has our new president accomplished in order to justify this ongoing rally? Well, aside from a flurry of executive orders that have reversed some of the prior president's executive orders, not very much. But it is what he has promised that has investors drinking the Kool-Aid.  

The litany of tax cuts, infrastructure spending, Obamacare overhaul and an end to onerous rules and regulations has given investors hope. Analysts and pundits are fueling those feelings by drawing up all sorts of "what-if" scenarios that promise good days ahead.

Material, building, construction and defense sectors have skyrocketed in price because of promises of increased defense and infrastructure spending. Forecasters see a big jump in corporate earnings if taxes are cut. As for the impact of less regulation, that is expected to have a beneficial impact on business spending and capital investments.

If the election was about "Making America Great Again" why are overseas markets going up as well? Wasn't President Trump going to launch devastating trade wars with the rest of the world, sending us all down the drain? Others were/are sure that World War III is right around the corner, now that there is a "wild man" in the White House. Yet, global stock markets are going up as well.

One explanation may be that overseas players believe Trump's bark is nowhere near his bite. So far that has proven to be the case. Others are taking heart, hoping that his example will lead to changes in their own countries. One could argue that Brexit began a populist movement worldwide that rejected the status quo, the rule of the few over the many and a revival of capitalism. A case in point is the rise of yet another Trump-like politician in France, where Jean-Marine Le Pen, the far-right candidate of the National Front, looks set to gain even more popularity.

While all of this movement may be intoxicating to market participants, we need to see a little more beef before justifying the present levels of stock prices. I have no doubt that the new administration will get much of what they want done, but it will take time. The market has just gotten a little ahead of itself right now.

Bill Schmick is registered as an investment advisor representative and portfolio manager with Berkshire Money Management (BMM), managing over $200 million for investors in the Berkshires.  Bill's forecasts and opinions are purely his own. None of the information presented here should be construed as an endorsement of BMM or a solicitation to become a client of BMM. Direct inquiries to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com.