The verdict on the U.S. Federal Reserve's quantitative easing program, including part 2, or QE2, will not be rendered for years. It may be longer, given the many areas of financial and economic policy the program has touched.

Anyone who says they definitively and incontrovertibly know QE2's long-term impact is not being genuine: many more data points have to occur to judge, for example, how QE2 affected banker lending psychology, let alone its impact on the U.S. economy.

That said, we can glean clues and insights by looking at current conditions, and one short-term data point reveals that since Fed Chairman Ben Bernanke disclosed the implementation of QE2 on August 27, the S&P 500 is up 17%, Bloomberg News reported Friday.

Continue reading A Bernanke Rally? S&P 500 Up 17% Since QE2 Announced

A Bernanke Rally? S&P 500 Up 17% Since QE2 Announced originally appeared on BloggingStocks on Fri, 17 Dec 2010 16:40:00 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.

Continue reading Fed Holds Rates Steady, Surprises No One

Fed Holds Rates Steady, Surprises No One originally appeared on BloggingStocks on Tue, 14 Dec 2010 17:20:00 EST. Please see our terms for use of feeds.

Continue reading Fed's QE2 is a Bridge to Normal Credit Markets

Fed's QE2 is a Bridge to Normal Credit Markets originally appeared on BloggingStocks on Tue, 07 Dec 2010 16:00:00 EST. Please see our terms for use of feeds.

Continue reading Fed's Beige Book Shows Moderate Growth, Market Doesn't React

Fed's Beige Book Shows Moderate Growth, Market Doesn't React originally appeared on BloggingStocks on Wed, 20 Oct 2010 16:40:00 EST. Please see our terms for use of feeds.

The world of international finance is a complex web. The U.S. is still the powerhouse when it comes to gross domestic product. Yet, while perched on top of the heap, the U.S. faces major problems with high-level debt and unemployment.

The U.S. Federal Reserve is faced with having to issue massive amounts of debt just to keep pace with the growing deficits. Now the Fed is planning another round of stimulus by buying more treasuries, dubbed QE2.

Continue reading Why Would Any Country Buy U.S. Treasuries?

Why Would Any Country Buy U.S. Treasuries? originally appeared on BloggingStocks on Sun, 03 Oct 2010 11:40:00 EST. Please see our terms for use of feeds.

While the market deals with the recent news that August housing starts hit a four-month high, most investors and analysts will remain focused on this afternoon's announcement from the Federal Reserve Bank.

The central bank will announce at 2:15 PM if it has decided to take any steps toward kick-starting economic growth. The main vehicle for such a kick in the market's pants is quantitative easing, which is purchasing government bonds in order to add more money to the system.

Continue reading Investors Remain Focused on Fed Announcement

Investors Remain Focused on Fed Announcement originally appeared on BloggingStocks on Tue, 21 Sep 2010 10:40:00 EST. Please see our terms for use of feeds.

The U.S. economic recovery is now proceeding at an anemic pace, a 1.6% GDP growth rate in the second quarter. And to top it off, certain analysts are arguing "the Fed is out of ammunition" and that means a double-dip recession is ahead.

Well, you can consider "betting" against the Fed, and assume even worse economic conditions are ahead, but before you do, contemplate the following:

• The Fed has already signaled that it's not likely to decrease the size of its balance until it sees sustained evidence of substantial GDP growth, and an increase inf capacity utilization. The calculation here is that the Fed is going to increase its balance sheet, including the purchase of long-term U.S. Treasuries, putting even more downward pressure on long-term interest rates.

Continue reading Is the Fed out of Ammunition?

Is the Fed out of Ammunition? originally appeared on BloggingStocks on Fri, 27 Aug 2010 15:00:00 EST. Please see our terms for use of feeds.

Continue reading PIMCO: 25% Chance of Deflation in U.S.

PIMCO: 25% Chance of Deflation in U.S. originally appeared on BloggingStocks on Thu, 05 Aug 2010 17:10:00 EST. Please see our terms for use of feeds.

Continue reading Ray of Light: Risk Appetite Has Increased

Ray of Light: Risk Appetite Has Increased originally appeared on BloggingStocks on Thu, 29 Jul 2010 14:00:00 EST. Please see our terms for use of feeds.

Continue reading Has the Fed Prevented a Bond Vigilante Attack on the U.S.?

Has the Fed Prevented a Bond Vigilante Attack on the U.S.? originally appeared on BloggingStocks on Tue, 22 Jun 2010 17:00:00 EST. Please see our terms for use of feeds.

The New York Federal Reserve Bank announced Monday that the Empire State Manufacturing index dropped to 19.1 in May from 31.9 in April. This drop suggests that the pace of growth slowed during May, with new orders and shipments dropping (although the benchmarks managed to remain in positive territory).

Why are we interested in the Empire State Manufacturing Index? Many economists consider it an early indicator for what will happen with the May edition of the Institute for Supply Management's national manufacturing survey that is due out in two weeks.

Continue reading Empire Index Falls in May

Empire Index Falls in May originally appeared on BloggingStocks on Mon, 17 May 2010 10:00:00 EST. Please see our terms for use of feeds.

Continue reading The Wild, Wild West Days of Finance Are Over

The Wild, Wild West Days of Finance Are Over originally appeared on BloggingStocks on Fri, 23 Apr 2010 16:40:00 EST. Please see our terms for use of feeds.

Big Ben Bernanke is letting his opinions be known early in 2010, and he is pointing the finger of blame for the economic crisis right at weak regulation. Bernanke is waiting for confirmation of his second term as Fed chair and he is looking for greater regulatory authority from Congress.

Bernanke told the American Economic Association that "Stronger regulation and supervision aimed at problems with underwriting practices and lenders' risk management would have been a more effective and surgical approach to constraining the housing bubble than a general increase in interest rates." This statement was part of Bernanke's response to accusations that the Fed was a major contributor to the financial crisis. The Fed head believes that the interest rates set by the Federal Reserve from 2002 to 2006 were appropriate.

Continue reading Ben Bernanke: Weak Regulation Caused Economic Crisis

Ben Bernanke: Weak Regulation Caused Economic Crisis originally appeared on BloggingStocks on Mon, 04 Jan 2010 12:30:00 EST. Please see our terms for use of feeds.

Last year saw one of the biggest stock rallies in history. Last year also saw bond yields fall by 3.72% on average. Investors who ran to the bond market for safety in 2008 and early 2009 saw their investments drop, while the risk takers who bought stocks are sitting pretty.

All of this was happening while the Federal Reserve sold $2.11 trillion of notes and bonds. The market was supported by the Fed's purchase of $300 billion of the $2.11 trillion in notes, bonds and inflated-related securities. Foreign demand was strong. Indirect bidders, who include foreign buyers, bought 45% of $1.1917 trillion in U.S. notes and bonds, up 29% from last year.

Continue reading Divergence Between Stock and Bond Returns Puts Pressure on the Bond Market

Divergence Between Stock and Bond Returns Puts Pressure on the Bond Market originally appeared on BloggingStocks on Mon, 04 Jan 2010 11:15:00 EST. Please see our terms for use of feeds.

Bubbles. bubbles. bubbles. The Federal Reserve is on the hot seat for not taking action to prevent the housing bubble. Up until now, the Fed has let the bubbles burst and then mopped up after them.

Now, after a year of financial chaos, the Fed is taking a new look at its bubble theory. Bernanke has concluded that it wasn't a good idea to let the housing bubble burst and then try to mop up after it. Such a genius!

Continue reading Bernanke's New Bubble Theory: We Must Raise Interest Rates to Prick Bubbles

Bernanke's New Bubble Theory: We Must Raise Interest Rates to Prick Bubbles originally appeared on BloggingStocks on Mon, 04 Jan 2010 09:00:00 EST. Please see our terms for use of feeds.

The U.S. Federal Reserve has maintained a "loose money" policy for over a year. Now, worried that all the money sloshing around could fuel inflation, it is trying to find ways to drain off some excess liquidity.

The latest salvo across the bow is to offer banks term deposits. These deposits would be locked up and the Fed would pay interest on them for a period of up to six months. The interest rate would be determined through an auction process. These term deposits would have the effect of taking money out of circulation for a set period.

Continue reading The Fed Plans to Offer Term Deposits to Banks

The Fed Plans to Offer Term Deposits to Banks originally appeared on BloggingStocks on Sun, 03 Jan 2010 10:00:00 EST. Please see our terms for use of feeds.

This is a cornerstone of the Fed, a true shibboleth (Google that one). But one of the first set of bonds the Fed bought under the TALF program were bonds backed by motorcycle loans made by Harley-Davidson (HOG) to its customers.

The Fed program was designed to provide loans and capital to businesses that were shut out of frozen credit markets, which is a good thing. But loans to Harley made to boost the sale of motorcycles to people who could not get loans elsewhere?

Continue reading Lie #8: The Fed Only Buys AAA-Rated Bonds and Securities

Lie #8: The Fed Only Buys AAA-Rated Bonds and Securities originally appeared on BloggingStocks on Sun, 27 Dec 2009 12:00:00 EST. Please see our terms for use of feeds.

Continue reading Federal Reserve holding conferences at luxury resorts -- is that wrong?

Federal Reserve holding conferences at luxury resorts -- is that wrong? originally appeared on BloggingStocks on Fri, 30 Oct 2009 12:00:00 EST. Please see our terms for use of feeds.

What could complicate the U.S. Federal Reserve's job to boost the economy? The price of oil. That's correct: the price of crude -- the world's most important commodity.

The reason? The impact of a high price of oil on prices throughout the U.S. economy.

Continue reading Rising oil prices could make the Fed's inflation-fighting job tougher

Rising oil prices could make the Fed's inflation-fighting job tougher originally appeared on BloggingStocks on Thu, 15 Oct 2009 13:10:00 EST. Please see our terms for use of feeds.