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Fed Promises Easy Money for an Extended Period
Every few weeks the world’s most powerful and influential central bankers — those in charge of the world’s number one reserve currency, the U.S. dollar — come together in what’s called the Federal Open Market Committee (FOMC).
They discuss the economy, interest rates, financial markets and whatever else they deem important. Then they decide to set the Federal Funds Rate at a level they think is appropriate.
And last week was their week. So today I want to analyze what their decisions mean for the stock market and for you as an investor.
The Fed Statement Reassures
A Very Lax Monetary Policy …
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Fixing the Monetary Unfixable
Dec. 1 (Bloomberg) — Treasuries rose, pushing yields to record lows, as Federal Reserve Chairman Ben S. Bernanke said the central bank may purchase Treasuries and target long-term interest rates to combat the deepening recession.
…and the monetizing of debt begins. I’ve talked extensively in several issues of Bourbon and Bayonets about the coming turmoil in long dates U.S. treasuries.
Many markets’(gold, oil, and forex) fundamentals have been identified and long term trends have been secured as an inevitability. The problem with these markets is timing out entry points. The government bond bubble is no different, and probably even more difficult in…
2Dec2008 | Oxbury Research | 0 comments | ContinuedIn the Long Run, the Dow’s 40% Nosedive May Actually Turn Into a Safe Landing
By Martin Hutchinson
Money Morning
With the near-record 678-point plunge yesterday (Thursday), the Dow Jones Industrial Average has plunged from its all-time-record high of 14,280 to below 8,600 in just one year’s time. To those accustomed to a five-figure Dow, this 40% freefall represents the unexpected descent of the stock market into a gigantic pit that signifies the dawn of the second Great Depression and an end to the free market system.
However, for those of us who believe in fundamental stock-market valuation, the outlook isn’t dire at all – indeed, the stock market’s long-term outlook is as upbeat as it’s been for…
13Oct2008 | Money Morning | Comments Off | ContinuedWhat to do When the Federal Reserve Finally Gets Serious about Inflation
The U.S. Personal Consumption Expenditures deflator, believed to be the primary gauge of inflation for U.S. Federal Reserve Chairman Ben S. Bernanke, rose 0.8% in June. That wiped out the gains from the June infusion of tax rebates and turned the key Personal Consumption Expenditure – which had risen a solid 0.6% in cash terms – into a feeble 0.2% drop in real terms.
It’s obvious that inflation is continuing its inexorable increase. It’s also obvious that the world’s monetary authorities – including the Federal Reserve – are going to have to get serious about this potentially ruinous trend.
For long-term…
5Aug2008 | Money Morning | Comments Off | ContinuedIndia and Other Emerging Economies Continue to Struggle With Inflation
India’s wholesale price index rose 7.82% for in the week ended May 10, the Ministry of Commerce and Industry reported. It marked the 13th straight week that the inflation rate has been above the central bank’s 5.5% target, highlighting the increased pressures many developing nations are under given soaring commodities prices.
The rate of inflation for the week ended May 15 is expected to be 8.02%, the highest level since September 2004, according to Bloomberg News.
“The current high level of inflation is totally unacceptable, especially in terms of impact on inflationary expectations,” Reserve Bank of India (RBI) Governor Yaga Venugopal…
27May2008 | Money Morning | Comments Off | ContinuedDaily Reckoning’s Bill Bonner: Demise of the Dollar and the New Economic Superpowers
Baltimore (TFN): The following was taken from Agora Inc. founder Bill Bonner’s appearance on TFN Smart Investing with Krista Das filmed on December 17, 2007. ( Watch the Market Forecast 2008 video.)
Krista Das: Over the past five years, the value of the U.S. dollar has declined dramatically against currencies like the euro, the British pound and the Canadian dollar. Analysts and commentators have blamed the U.S. twin deficits for the decline, as well as record levels of public and private debt in the United States.
While some like to look at current conversion rates in the context of decennial economic cycles, an…
16Jan2008 | Anonymous | 1 comment | Continued
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