The economic situation continues to erode both here in the U.S. and around the world. Interest rates continue to move up, which is a sign that investors are refusing to buy sovereign debt unless they are compensated with higher rates. This is putting pressure on world economies and…
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Yesterday, the U.S. Federal Reserve lowered the Federal Funds Rate by 50 basis points to one percent. Basically, we are at the same place we were in the summer of 2004, when then Fed Chairman Greenspan announced a Federal Funds Rate of one percent. In a nutshell, interest…
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As widely expected, at its FOMC meeting on Wednesday, the Federal Reserve decided to hold the Fed Funds rate intact at 2.00% for the first time in 10 meetings. At the same time, there were some concerns, as the Fed said that inflation risk could be an issue…
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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…
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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…
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The reporting of a weak U.S. gross domestic product (GDP) for the fourth quarter of 2007 on Thursday was not a surprise to me. Coming in at a dismal 0.6% rate, the fourth quarter reading was unchanged from the third quarter, but there is now added economic risk.…
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For years, U.S. lenders were giving away loans to literally anyone who asked. Banks worldwide were flush with cash and needed new financial instruments to haul in even more cash. So, they bought mortgage pool after mortgage pool, good and bad, packaged them nicely and sold them to…
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The surprise move by the Federal Reserve in cutting the benchmark Fed Funds rate by 50 basis points to 4.75% may turn out to be the best move. Given the concerns in the credit and housing markets, it is hoped the cut in rates could halt the decline…
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I don't have any sense as to where the stock market is going to go over the next month or so and neither do many on Wall Street. The fact of the matter is that anything could happen to the stock market over the near term. Stock prices…
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Because the issue is credit, the Federal Reserve is involved in appeasing equity investors. I don't recall a time when the central bank acted so fast to placate the needs of the stock market. Many are talking about an interest rate decrease within the next month. I guess…
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Markets are clearly trading on apprehension, as there remain concerns relating to the U.S. subprime mortgage market along with the state of the U.S. credit market and its potential negative impact on the economy. On Friday, the Federal Reserve cut the discount rate by 50 basis points to…
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I have a feeling that last Thursday, as long-term investors braced for the weekend, speculators rushed to accumulate as many shorts as possible that same afternoon. Sure enough, things went well overnight, with sinking Asian markets calling for yet another disastrous trading day in North America, perhaps of…
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Two schools of thought on the economy prevail today: First, we have the bullish crowd, who believes three simple factors are causing the economy and the stock market to continue rising. Those three factors: interest rates that are historically low, lots of liquidity in the marketplace (thanks to…
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There's no better way to describe a correction in the stock market. For most investors who hold a number of long positions -- it hurts! At the end of the day, there isn't much you can do about it. Even though there were other factors contributing to the…
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With the cost of housing, gas, even going out for dinner, having all gone up over the past few years, you'd think family income would have risen. But it hasn't. According to recent report from the Federal Reserve, average U.S. family income fell 2.3% to an inflation adjusted…
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The news is out and it's big. In January, the U.S. trade deficit was a new record $68.5 billion. What does this number mean? It means in January Americans imported $68.5 billion more in goods than they exported. At the current rate, the 2006 U.S. deficit will hit…
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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,…
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As widely expected, outgoing Federal Reserve Chairman Alan Greenspan made his exit by lifting the fed funds rate by another 25-basis points to 4.50 percent: the 14th increase since rates began to ratchet up in June 2004. The increase did not surprise the market, but traders and investors…
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It's a funny stock market right now. Perhaps it always is. I was amazed that the devastation of hurricanes Katrina and Rita didn't hurt stock prices more. Moreover, the Main Street economy is showing incredible resilience in spite of the constant shocks from Mother Nature, oil and gas…
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I know Michael already discussed Federal Reserve Chairman Alan Greenspan's recent speech to the National Association for Business Economics, but there's more to the story that I want to tell today. New research, conducted under the supervision of America's favorite 79-year-old financial talking head, shows that Americans are…
