Archive for the ‘Federal Reserve’ Category

What Awaits Small-caps in 2010?

By Wednesday, December 23, 2009

During its recent committee meeting, the Federal Reserve announced that it is time to shut off the government money taps, winding up most of the U.S. specialty liquidity programs and starting by shutting down currency swaps with most foreign central banks by February 1, 2010. At the time, the Fed did not even address the risk of inflation or hyperinflation in the short term. Thus, the expectation is that interest rates will remain at ultra-low levels close to zero for at least the first half of 2010, if not longer. Eventually, however, interest rates will have to go up if the economy finally starts growing at a faster pace.

What Happens When Money’s Too Easy

By Wednesday, September 24, 2008

My favorite investment analyst must be ready to have kittens. Of course, Jim Rogers has advocated the abolition of the Federal Reserve for a number of years, and this latest government bailout must have him steaming.

He argues that it was the central bank that helped create (but not exclusively) the housing crisis that we’re experiencing now. This precipitated the credit crunch and, subsequently, the financial crisis on Wall Street.Read More

Is All the Worry About Inflation Justified?

By Thursday, June 26, 2008

Yesterday, the U.S. Federal Reserve Open Market Committee met to set interest rates — and it did what most expected, which is nothing. “Standing Pat” is the official term when the Fed neither raises nor reduces interest rates. Here’s the statement the FOMC issued yesterday after its meeting:

“Although downside risks to growth remain, they appear to have diminished somewhat, and the upside risks to inflation expectations have increased.” Old … Read More

Hands Off Financial Stocks

By Tuesday, May 20, 2008

A 75-basis-point cut in the Fed Funds rate to 2.25% by the Federal
Reserve on Tuesday along with some decent earnings from several financial institutions helped to drive robust buying in the markets. Yet the fiasco that is occurring at The Bear Stearns Companies, Inc. (NYSE/BSC) remains a concern that the credit crunch may get worse.

What the Two Most Important Stock Charts of Today Tell Us

By Thursday, May 1, 2008

Yesterday, in a widely anticipated move, the U.S. Federal Reserve reduced interest rates one more time — by one quarter point to two percent. Wednesday was the seventh consecutive interest rate cut by the Fed.

The big surprise for investors yesterday?

The Fed said that inflation “expectations” have risen, while it also removed its usual “downside” risk to the economy language that has accompanied the Fed’s past few interest rate … Read More

Anything Could Happen in this Market

By Thursday, November 29, 2007

I have to say that I’m very nervous about the prospects for the stock market. One part of me is really bullish, while the other is very uneasy about the future for stock prices.

I’m bullish because the stock market has already pulled back significantly and quickly from its recent high. Corporate earnings are good, monetary policy is accommodative, and the credit crisis is mostly behind us.

I’m bearish because … Read More

Musings of a 27-Year Stock Market Veteran

By Monday, April 2, 2007

The overview of the U.S. Federal Reserve System (Fed) on its web site states that it was founded in 1913 with the mandate to provide a more stable monetary and financial system. Over the years, its role has expanded, and the Fed is now responsible for four general areas:

Formulating monetary policy in pursuit of maximum employment, stable prices, meaningful inflation, and moderate long-term rates

Supervising and regulating banking institutions… Read More

Consumer Borrowing Plummeting Fast

By Wednesday, November 8, 2006

What does this picture tell you about the state of the U.S. economy and the changing spending habits of consumers?

The U.S. Federal Reserve released a report yesterday stating consumer borrowing in the U.S. fell $1.2 billion in September–the biggest monthly decline since April, 1992. Loans for automobiles dropped the most, down by an annual rate of 3.2% in September.

In the same report, the Fed said borrowing on credit … Read More

Diversified Portfolio Pays off Long-Term

By Wednesday, February 22, 2006

Thinking about the current state of the stock market, I can’t help but be optimistic for the rest of 2006. Corporations are running lean operations and both large and small companies alike are suitably profitable.

Inflation is a concern, but the Federal Reserve is dealing with it in a reasonable fashion. Job growth is solid and building and construction, particularly in the housing market, remains very strong. All in all, … Read More

Not So Lucky Number 16

By Thursday, February 16, 2006

The U.S. Commerce Department just reported a surge in U.S. retail sales for January, 2006. Retail sales, excluding autos, were up 2.2 percent last month, the best posting in six years. With autos included, retail sales were up 2.3 percent–the largest one month gain (including autos) since May, 2004.

With the retail sales numbers for January being double what economists had expected, bond prices were hammered on fears the Fed … Read More