Federal Reserve chief Janet Yellen and company find themselves at a crossroads that could determine whether the stock market and the U.S. economy may suffer a fate not seen since the Great Depression, BK Asset Management's Boris Schlossberg said Thursday.
The December interest rate hike by the Fed, the first such move in a decade, might not prove a fatal misstep, he told CNBC's "Squawk Box" on a day when global markets were slammed after the shortest trading day in China's 25-year stock trading history. Twenty-nine minutes into Thursday's session, a 7 percent drop in Chinese equities triggered an automatic suspension of trading for the second time this week.
Against a backdrop of renewed concerns about the world's second-largest economy, Schlossberg said of the Fed's approach to future rates: "One and done is OK. It's not that damaging."
But he warned that further increases would be a "huge 1937-type of mistake." In 1937, the Fed raised rates after Depression-era stimulus programs, sparking a further economic downturn.
"We're in a real serious pickle now. There's little policy flexibility left," Schlossberg said amid questions about whether Fed policymakers may have to reverse course and cut rates. "This is going to be the year to sell rallies, not to buy dips."