The Federal Reserve Open Market Committee (FOMC) issued its statement indicating again that interest rates will remain low for an extended period of time and that quantitative easing will continue with the purchase of "$600 billion of longer-term Treasury securities by the end of the second quarter of 2011."

There were no dissents against the FOMC statement.

The FOMC left its options open for the future and gave no specific guidance as to what actions it will take when QE2 ends.

Continue reading The Fed Decision: It's All about Unemployment!

The Fed Decision: It's All about Unemployment! originally appeared on BloggingStocks on Wed, 26 Jan 2011 15:30:00 EST. Please see our terms for use of feeds.

The Federal Reserve Open Market Committee stated, again, that interest rates will remain low for an extended period of time and that quantitative easing will continue with the "purchase $600 billion of longer-term Treasury securities by the end of the second quarter of 2011, a pace of about $75 billion per month." Thomas Hoenig again voted against the FOMC policy.

The FOMC left its options open for the future and gave no specific guidance as to what actions it will take when QE2 ends next year.

Continue reading The Fed Statement: No News, Just Confirmation of Policy

The Fed Statement: No News, Just Confirmation of Policy originally appeared on BloggingStocks on Wed, 15 Dec 2010 09:50:00 EST. Please see our terms for use of feeds.

The Federal Reserve Open Market Committee (FOMC) issued its statement indicating again that interest rates will remain low for an extended period of time and that proceeds of Treasury securities will continue to be re-invested into additional Treasury securities.

There will also be additional quantitative easing. This will take the form of the purchase of an additional "$600 billion of longer-term Treasury securities by the end of the second quarter of 2011, a pace of about $75 billion per month," according to the Fed's statement. This was well within the $500 billion to $1 trillion range expected by many economists and strategists. Thus, the current program appears to be largely discounted by the market.

Continue reading The Fed Decision: This is Not the End of Quantitative Easing!

The Fed Decision: This is Not the End of Quantitative Easing! originally appeared on BloggingStocks on Thu, 04 Nov 2010 09:30:00 EST. Please see our terms for use of feeds.

The Federal Reserve Open Market Committee (FOMC) issued its statement indicating again that interest rates will remain low for an extended period of time and that proceeds of Treasury securities will be continue to be re-invested into additional Treasury securities. There was no additional mention of quantitative easing. Thomas Hoenig again dissented against the FOMC statement.

Although the FOMC mentioned the economic improvement continuing, it indicated increasing concern with high unemployment and depressed housing. It also mentioned that "bank lending has continued to contract."

Continue reading The Fed Decision: Where Is the Quantitative Easing?

The Fed Decision: Where Is the Quantitative Easing? originally appeared on BloggingStocks on Tue, 21 Sep 2010 17:00:00 EST. Please see our terms for use of feeds.

The Federal Reserve Open Market Committee (FOMC) issued its statement indicating again that interest rates will remain low for an extended period of time and that proceeds from agency debt and agency mortgage-backed and Treasury securities will be re-invested into Treasury securities. Thomas Hoenig dissented against the FOMC statement and wants a tighter monetary policy.

The FOMC mentioned the economic improvement continuing albeit at a reduced pace but indicated that it was a mixed picture with high unemployment and depressed housing. It also mentioned that "bank lending has continued to contract."

Continue reading The Fed Decision: Quantitative Easing Continues!

The Fed Decision: Quantitative Easing Continues! originally appeared on BloggingStocks on Tue, 10 Aug 2010 15:30:00 EST. Please see our terms for use of feeds.

The Federal Reserve Open Market Committee (FOMC) issued its statement indicating again that interest rates will remain low for an extended period of time. Thomas Hoenig dissented against the FOMC statement and wants a much tighter monetary policy. He still remains the only voice against the statement but is said to favor a change in language, not an immediate rise in interest rates.

The FOMC mentioned continued economic improvement but indicated that it was a mixed picture with high unemployment and depressed housing. With unemployment expected to remain elevated for the foreseeable future and little inflationary pressure from the CPI thus far, it is in no rush to tighten.

Continue reading The Fed Decision: Not the Time to Take Chances!

The Fed Decision: Not the Time to Take Chances! originally appeared on BloggingStocks on Wed, 23 Jun 2010 17:00:00 EST. Please see our terms for use of feeds.

The Federal Reserve Open Market Committee (FOMC) issued its statement indicating again that interest rates will remain low for an extended period of time. The decision was not unanimous: it came with one dissenting vote.

The Fed has, in essence, decided to continue its current course of discontinuing quantitative easing with the elimination of the remaining special programs. Shrinking the Fed balance sheet is the next step. However, monetary policy in general will be loose with the rates staying low for an extended period of time.

Continue reading The Fed Decision: No More Excitement for the Week!

The Fed Decision: No More Excitement for the Week! originally appeared on BloggingStocks on Wed, 28 Apr 2010 18:00:00 EST. Please see our terms for use of feeds.

The Federal Reserve Open Market Committee (FOMC) issued its statement indicating again that interest rates will remain low for an extended period of time. The decision was not unanimous with one dissenting vote.

The Fed has in essence decided to continue its current course of discontinuing quantitative easing and developing a plan that it can tighten monetary policy quite quickly if necessary. It also offered assurance that monetary policy will be loose with the rates staying low for an extended period of time.

Continue reading The Fed Decision: Maintaining an Extremely Delicate Balance!

The Fed Decision: Maintaining an Extremely Delicate Balance! originally appeared on BloggingStocks on Tue, 16 Mar 2010 17:00:00 EST. Please see our terms for use of feeds.

The Federal Reserve Board raised the discount rate by 0.25% after the close of the market Thursday, raised the minimum bid for the Term Auction Facility (TAF) by 0.25%, and shortened the maximum maturity for primary credit loans to overnight. The stock market has gone lower in reaction to this statement.

Several Fed officials have issued comments emphasizing that this is not the beginning of monetary tightening. However, uncertainty still hangs over the markets despite these statements.

Continue reading The Stock Market and the Discount Rate Increase: Damage Control and Mixed Messages!

The Stock Market and the Discount Rate Increase: Damage Control and Mixed Messages! originally appeared on BloggingStocks on Fri, 19 Feb 2010 13:40:00 EST. Please see our terms for use of feeds.

The Federal Reserve Open Market Committee (FOMC) issued its statement indicating again that interest rates will remain low for an extended period of time. The decision was not unanimous with one dissenting vote.

The Fed continues to avoid any potential language which could disrupt the financial markets. Chairman Bernanke, a student of the Great Depression, does not want to do anything to damage the current stabilization in the economy. This is particularly true with a controversial vote on the Chairman's confirmation coming soon.

Continue reading The Fed Decision: The Real News Was Yesterday, Not Today!

The Fed Decision: The Real News Was Yesterday, Not Today! originally appeared on BloggingStocks on Wed, 27 Jan 2010 17:40:00 EST. Please see our terms for use of feeds.

The Federal Reserve Open Market Committee (FOMC) issued its statement indicating again that interest rates will remain low for an extended period of time. The decision was unanimous.

The Fed continues to avoid any potential language which could disrupt the financial markets. Chairman Bernanke, a student of the Great Depression, does not want to do anything to damage the current stabilization in the economy.

Continue reading The Fed decision: Ending extraordinary measures but no monetary tightening

The Fed decision: Ending extraordinary measures but no monetary tightening originally appeared on BloggingStocks on Wed, 16 Dec 2009 17:00:00 EST. Please see our terms for use of feeds.

The Federal Reserve Open Market Committee (FOMC) issued its statement almost exactly as expected. The language on interest rates is remaining low for an extended period of time remained largely unchanged, and the decision was unanimous.

As I have mentioned earlier, the Fed continues to avoid any potential language which could disrupt the financial markets. Any potentially controversial ideas seem to be reserved for speeches by the Chairman and other government officials.

Continue reading The Fed decision: almost exactly as expected!

The Fed decision: almost exactly as expected! originally appeared on BloggingStocks on Wed, 04 Nov 2009 15:45:00 EST. Please see our terms for use of feeds.

The Federal Reserve Open Market Committee (FOMC) issued its statement today making its best attempt to be a non-event. The language on interest rates and quantitative easing remained largely unchanged, and the decision was unanimous.

This decision was designed to avoid any potential landmines which could disrupt the financial markets. The FOMC wanted this statement to be a non-event and seems to have largely succeeded.

Continue reading The Fed decision: Attempting to be a non-event

The Fed decision: Attempting to be a non-event originally appeared on BloggingStocks on Wed, 23 Sep 2009 16:45:00 EST. Please see our terms for use of feeds.

The Federal Reserve released its latest beige book report detailing economic conditions across the country based upon observed evidence and conversations. The 12 Fed district banks "indicated that the pace of decline has moderated since the last report or that activity has begun to stabilize, albeit at a low level."

It indicates that retail activity is weak with essentially no wage pressure. This may be good news on the inflation front but is negative for the employment situation. There was some improvement in healthcare and technology.

Continue reading The Fed Beige Book: Maybe a bottom but where's the bounce?

The Fed Beige Book: Maybe a bottom but where's the bounce? originally appeared on BloggingStocks on Wed, 29 Jul 2009 16:45:00 EST. Please see our terms for use of feeds.

The Federal Reserve Open Market Committee (FOMC) issued its unanimous decision. The language on interest rates and quantitative easing remained unchanged. It indicated that inflation is not a problem despite a recent rise in oil prices and sees economic stabilization although continued weakness.

This decision was designed to avoid potential landmines which could disrupt the financial markets. In other words, the FOMC wanted this statement to be a non-event and seems to have largely succeeded.

Continue reading The Fed Decision: Avoiding Landmines!

The Fed Decision: Avoiding Landmines! originally appeared on BloggingStocks on Wed, 24 Jun 2009 16:30:00 EST. Please see our terms for use of feeds.

The Federal Reserve Open Market Committee (FOMC) issued its decision on interest rates. The market anxiously awaited the decision to determine if there would be any surprises like the previous decision in which the Fed announced a massive quantitative easing program.

This decision was quite different and can be summed up in two words: no change. There was virtually no change from the previous statement aside from an acknowledgment of recent economic news. In other words, it turned out to be a non-event.

Continue reading The Fed Decision: First rule is do no harm!

The Fed Decision: First rule is do no harm! originally appeared on BloggingStocks on Wed, 29 Apr 2009 16:30:00 EST. Please see our terms for use of feeds.

We are getting our first official information about the Bank Stress Test with the release of the White Paper detailing the assumptions behind how the stress tests were conducted. This is the initial step in a process culminating in the release of results for the individual banks.

In this case, the process may be more important than the result. We all know the results in advance. Secretary Geithner has already told us that most banks have already passed in previous speeches. I doubt that the government would announce with major fanfare that the American financial system is insolvent. There are two major issues regarding investor expectations that have to be addressed: credibility and panic.

Continue reading The real stress of the bank tests: Managing investor expectations!

The real stress of the bank tests: Managing investor expectations! originally appeared on BloggingStocks on Fri, 24 Apr 2009 17:40:00 EST. Please see our terms for use of feeds.

Several banks, including Wells Fargo & Company (NYSE: WFC), JPMorgan Chase & Company (NYSE: JPM), Goldman Sachs (NYSE: GS), and Citigroup, Inc. (NYSE: C), have reported earnings that beat expectations substantially. All earnings were down compared to last year but much less than what the experts were expecting. The stock market reacted to these earnings reports like gasoline on a fire and exploded to the upside.

Continue reading Bank news: Focus on the assets, not the earnings!

Bank news: Focus on the assets, not the earnings! originally appeared on BloggingStocks on Fri, 17 Apr 2009 17:45:00 EST. Please see our terms for use of feeds.

The G-20 summit was a true public relations success. There were no walkouts by France or any other country as had been previously feared. There were statements that protectionism should be avoided. It appeared that the world learned the lesson from Smoot Hawley Tariff Act during the Hoover administration. There was a commitment to fund the International Monetary Fund with additional capital. Despite low expectations, there appeared to be an international consensus by the G-20 nations.

President Obama was warmly received by all the G-20 nations. This was in sharp contrast to the chilly reception of the Bush administration at prior G-20 summits.

Continue reading The G-20 Meeting and the Financial Crisis: Victory declared but massive economic problems Remain!

The G-20 Meeting and the Financial Crisis: Victory declared but massive economic problems Remain! originally appeared on BloggingStocks on Wed, 08 Apr 2009 17:30:00 EST. Please see our terms for use of feeds.

• The bill may violate the Constitution which prohibits laws targeting specific people.
• The nature of the statute bothers the business community which is rightly concerned that similar statutes if this one is deemed legal could be enacted to confiscate wealth on an arbitrary basis.
• This bill does very little to establish a workable framework to address similar problems.
  

Thus, the bill may solve one problem but creates even more in the process.

Continue reading The bonus tax problem: Recognizing the insolvency is the first step!

The bonus tax problem: Recognizing the insolvency is the first step! originally appeared on BloggingStocks on Mon, 30 Mar 2009 15:20:00 EST. Please see our terms for use of feeds.