Monetary Policy

Monetary policy is the mechanism through which the supply of money is controlled by monetary authorities. The goal of almost every monetary authority around the world is stability of prices. If prices are unstable—either too high or, in some circumstances, decreasing—this causes unforeseen and unwanted consequences for the economy as a whole. Monetary authorities usually enact changes to interest rates for the purpose of changing the demand for money. Monetary policy can be either expanding, when interest rates are lowered and more money is available at a cheaper, or contracting, when interest rates are raised to make money more expensive to slow price increases.


Although the U.S. labor market has seen steady declines in unemployment, wage growth has ground to a near standstill, suggesting the U.S. economy is far less stable than commonly believed. The Employment Cost Index edged only 0.2% in the second…

Improving unemployment numbers added fuel to the rise in the U.S. dollar. While the U.S. dollar’s strength is likely to be a major issue this year, long-term investors shouldn’t worry. Let me explain… U.S. Dollar Gaining Strength There is a…

Lots of corporate earnings are still streaming in for the third quarter, though mostly among smaller-cap companies. Top-line growth certainly isn’t robust, but it’s not bad either. The surprise I’ve noticed in third-quarter reporting has been the profitability. There has…

Credit card companies are some of the best indicators in the global economy. Visa Inc. (V) just reported a pretty decent quarter. While earnings were down comparatively due to a one-time charge, adjusted earnings handily beat consensus. The company’s fiscal…

If there’s one thing the stock market needs, it’s a distraction from global growth worries and geopolitical events. And corporate earnings are the ticket for that as this season’s numbers are starting to pour in. Pharmaceutical benchmark Johnson & Johnson…

With nine months behind us this year, today we look at how two popular forms of investment have done in 2014 and where I think they are headed for the remainder of the year. Starting with stocks, the Dow Jones…

According to Fed Chairwoman Janet Yellen, “More jobs have now been created in the recovery than were lost in the downturn… the unemployment rate, at 6.2% in July, has declined nearly 4 percentage points from its late 2009 peak.” (Source:…

The numbers are still coming in pretty good this earnings season and corporate outlooks are holding up well for the year. Stocks have been trading off of Federal Reserve Chairman Janet Yellen’s monetary policy report to Congress, and less so…

What led to the 2008/2009 stock market and real estate crash and subsequent Great Recession can be attributed to one factor: the sharp rise in interest rates that preceded that period. In May of 2004, the federal funds rate, the…

If there ever was an equity security epitomizing the notion that the stock market is a leading indicator, Caterpillar Inc. (CAT) would fit the bill. This manufacturer is in slow-growth mode, but it’s been going up on the stock market…

Oracle Corporation (ORCL) announced a quarterly revenue gain of three percent, but Wall Street was looking for more and the company’s share price retreated on its earnings results. If it weren’t for the Federal Reserve, we probably would be in…

It’s a difficult environment in which to be constructing new equity portfolios right now, mostly due to the very simple reason that the stock market is at an all-time record high and it’s likely that monetary policy will change soon.…

With the Dow Jones hitting 17,000 being pretty likely in the not-too-distant future, from there, it’s only another 18% or so until the Dow hits 20,000, which is pretty incredible. These numbers seemed so unrealistic just a few years ago…

Despite a difficult start to the year, countless positions recently turned higher, even among slow-growth names. E. I. du Pont de Nemours and Company (DD) is a company currently trading around 14 times its forward earnings, offering a 2.6% dividend…

The U.S. housing market is in trouble again, and as crazy as it sounds, it won't surprise me to see home prices decline soon. Here are three reasons why: Existing-home sales have been declining since July of last year. The…

There still is no real trend in the equity market. One day, stocks sell off big-time; the next, the S&P 500 and Dow Jones Industrial Average hit new record-highs. This is a very tough market to figure; anything can happen…