This past week's data point of significance for investors has to be the revised, final, fourth quarter U.S. GDP report, which indicated the world's largest economy grew 3.1% in the quarter, as well as 2.9% for 2010.

In 2009, the U.S. economy contracted 2.6% during the Great Recession -- the worst downturn since the Great Depression -- and even though the final 3.1% fourth quarter stat was better than the 2.8% previously estimated fourth quarter growth rate, the growth pace still is not strong enough.

Continue reading Inadequate Q4 U.S. GDP Growth Points to Fed's Extension of QE2

Inadequate Q4 U.S. GDP Growth Points to Fed's Extension of QE2 originally appeared on BloggingStocks on Sun, 27 Mar 2011 10:10:00 EST. Please see our terms for use of feeds.

The Federal Open Market Committee (FOMC) meets again this week to review economic conditions and set monetary policy. On whether the Fed should end quantitative easing or extend it, Atlanta Fed chairman Dennis Lockhart recently said that the Fed should remain flexible given the rising energy prices, which could be a sign of coming inflation. Either at this meeting or the next, the Fed could signal that interest rates will rise as a hedge against inflation.

Inflation will also be the focus when the Department of Labor releases the Producer Price Index (PPI) and Consumer Price Index (CPI) this week. Back in January the core PPI (which excludes energy and food costs) had its biggest jump in two years, and the core CPI had its largest uptick in more than year, the second month in a row in which consumer prices jumped.

Continue reading Week in Preview: Inflation, the FOMC and Nike Earnings

Week in Preview: Inflation, the FOMC and Nike Earnings originally appeared on BloggingStocks on Sun, 13 Mar 2011 12:30:00 EST. Please see our terms for use of feeds.

One economic data point that sort of slipped under the radar recently concerned the U.S. Federal Reserve's $78.4 billion payment to the U.S. Treasury in 2010, up about 65% from $47.4 billion in 2009.

And the reason for the revenue surge? Experienced investors or others who have reviewed the Fed's report will realize that much of it stems from income from the Fed's purchase of mortgage securities and Treasury securities in connection with the quantitative easing, part 2 program, or QE2.

Under QE2, the Fed will purchase up to $600 billion in assets from November 2010 to June 2011 -- this coming after the Fed purchased $1.7 trillion in assets through March 2010.

Continue reading Tell-Tale Stat: Fed Paid $78.4 Billion to U.S. Treasury in 2010

Tell-Tale Stat: Fed Paid $78.4 Billion to U.S. Treasury in 2010 originally appeared on BloggingStocks on Fri, 21 Jan 2011 15:00:00 EST. Please see our terms for use of feeds.

Has the U.S. Federal Reserve's tone regarding its stance toward its asset purchase program(quantitative easing part 2, or QE2), changed?

From the recent comments of Federal Open Market Committee members, it's tough to detect a shift.

For investors, the Fed's QE2 tone is hardly insignificant. A Fed signal that an unwinding of asset purchases is likely before June would affect U.S GDP growth expectations, and, by extension, corporate revenue expectations of many firms for the second half of 2011.

Continue reading Fed's Recent Tone on QE2: Does It Change the Investment Climate?

Fed's Recent Tone on QE2: Does It Change the Investment Climate? originally appeared on BloggingStocks on Wed, 12 Jan 2011 15:30:00 EST. Please see our terms for use of feeds.

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.

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.

Federal Reserve Chairman Ben Bernanke will appear on 60 Minutes this Sunday to defend his controversial stimulus package, dubbed QE2, of buying $600 billion of Treasury securities.

In the CBS interview, Bernanke explains his intentions with QE2 and defends the notion that this stimulus will not lead to inflation. He also told CBS that he is not ruling out the purchase of more securities.

Continue reading Bernanke on 60 Minutes: We Could Have QE3

Bernanke on 60 Minutes: We Could Have QE3 originally appeared on BloggingStocks on Sat, 04 Dec 2010 12:40:00 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 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.

Almost everybody believes the Federal Reserve is about to implement another round of stimulus. And the reasons cited in favor of such a move are many. One argument put forth is a fear of deflation, as reported in the article by CNNMoney/Fortune. Well, with GDP at 2% for the last quarter, the economy is slow, but it is not sinking into deflation.

Then what is the Fed up to? Why do another round of stimulus? Let's try this argument. The plans are to print perhaps another trillion dollars by buying Treasuries. When the Fed buys Treasuries, the money goes directly to the bankers. The $64,000 question is why give all this money to the bankers?

Continue reading Why Is the Fed Doing Another Round of Stimulus?

Why Is the Fed Doing Another Round of Stimulus? originally appeared on BloggingStocks on Mon, 01 Nov 2010 10:30:00 EST. Please see our terms for use of feeds.

Goldman Sachs (GS) was out with a note on Friday recommending that clients buy long-dated Treasuries ahead of the Federal Reserve quantitative easing announcement, which will take place on Wednesday.

Previously, the consensus was that the Fed would focus on shorter maturity bond purchases. Goldman, however, believes that the purchases will extend out to the 30-year bond.

Continue reading Frontrunning The Fed: Buy Long-Dated Treasuries

Frontrunning The Fed: Buy Long-Dated Treasuries originally appeared on BloggingStocks on Sun, 31 Oct 2010 15:10:00 EST. Please see our terms for use of feeds.

It will be a busy week. Republicans are poised to gain control of the House of Representatives and gain governorships in Tuesday's mid-term elections. Also, the Federal Reserve is expected to announce another round of quantitative easing Wednesday, following the FOMC meeting. Major retailers are scheduled to report October same-store sales Thursday, while the October unemployment rate, announced on Friday, is expected to remain at 9.6%.

Toyota's (TM) fiscal second-quarter results will be one of the highlights on the earnings front this week. After three periods of way underestimating Toyota's earnings, have the analysts surveyed by Thomson Reuters got it right this time? The stock sure could use a boost. Teva Pharmaceuticals (TEVA) is in a similar situation; i.e., high expectations for this week's quarterly results but a stock in need of a boost. Marathon (MRO) and Starbucks (SBUX) are also expected to post strong earnings growth this week, but both stocks are riding high.

Continue reading Week in Preview: Election, QE2, Unemployment and More Earnings

Week in Preview: Election, QE2, Unemployment and More Earnings originally appeared on BloggingStocks on Sun, 31 Oct 2010 12:30:00 EST. Please see our terms for use of feeds.

With only a few days left before the Federal Reserve meeting on November 2-3, speculation is rampant concerning whether the Fed will ease, and if so how much.

Here are a few scenarios, as reported in Reuters:

• The general consensus is that the Fed will do some kind of quantitative easing, dubbed QE2.
• Some think it will be $500 billion for five months with more if needed.
• Others think it could be $750 to $1 trillion.
• Will it be open ended with $100 billion per month?
• Perhaps it will be $500 to $750 billion with more if needed.

Continue reading Will the Fed Ease? If So, How Much?

Will the Fed Ease? If So, How Much? originally appeared on BloggingStocks on Wed, 27 Oct 2010 10:30:00 EST. Please see our terms for use of feeds.

Atlanta Federal Reserve Bank President Dennis Lockhart put forth his proposal for a new round of quantitative easing, dubbed QE2. He sees the Fed purchasing $100 billion in treasuries per month. Lockhart made his statement in an interview on CNBC and is reported by Reuters.

Lockhart is the third Fed official to come forth in favor of easing. Last week we heard from Charles Evans and William Dudley who both favor QE2.

Continue reading Fed's Lockhart Says Easing of $100 Billion per Month Sought

Fed's Lockhart Says Easing of $100 Billion per Month Sought originally appeared on BloggingStocks on Tue, 19 Oct 2010 18:00:00 EST. Please see our terms for use of feeds.

U.S. Federal Reserve Chairman Ben Bernanke gave his reasons for more quantitative easing, dubbed QE2, in a speech at the Federal Reserve Bank of Boston, and reported in the Wall Street Journal.

The linchpin of his thesis is that inflation is too low, currently running at 1.1%. This is lower than the 2% level that the Fed had previously set.

Bernanke gave a rather gloomy assessment of the economy, saying that business spending has slowed, consumer finances are improving unevenly, housing remains depressed and job growth isn't enough to bring down unemployment.

Continue reading Bernanke: Inflation Too Low and Economic Growth Too Slow

Bernanke: Inflation Too Low and Economic Growth Too Slow originally appeared on BloggingStocks on Fri, 15 Oct 2010 12:30:00 EST. Please see our terms for use of feeds.

The U.S. Federal Reserve is in a quandary about how to explain its anticipated quantitative easing stimulus, dubbed QE2. Officials worry that an added stimulus will create unwanted inflation.

Fed officials Charles Evans and William Dudley have spoken in favor of the new stimulus. Dudley told the Financial Times that asset purchases and communication are "two potentially complimentary avenues."

Continue reading Fed in a Quandary About How to Explain QE2

Fed in a Quandary About How to Explain QE2 originally appeared on BloggingStocks on Fri, 08 Oct 2010 13:00:00 EST. Please see our terms for use of feeds.

The Federal Reserve has said that it stands ready for more stimulus if needed. Just the hint of more easing has bolstered the markets. Very often the anticipation of an action creates market movement. As an example, bond market prices have rallied, with the 10-year note yield at historic lows.

The Fed's point man for implementing policy decisions is Brian Sack, who heads the N.Y. Fed's open market operations. Sack gave a speech in California in which he gave us more specific details about what to expect when the Fed starts easing.

Continue reading What Can We Expect When the Fed Starts QE2?

What Can We Expect When the Fed Starts QE2? originally appeared on BloggingStocks on Tue, 05 Oct 2010 09:30:00 EST. Please see our terms for use of feeds.

There is growing debate over whether another round of quantitative easing (QE2) will ease unemployment.

In an interview with the Financial Times, Philadelphia Fed President Charles Plosser set out guidelines for more stimulus. He said: "I think that before we engage in further quantitative easing, we need to be very clear about what it is we are trying to do, how we're going to go about doing it, how we're going to measure whether we're effective at it or not, and how we're going to communicate that."

Continue reading Philly Fed President: How Will QE2 Ease Unemployment?

Philly Fed President: How Will QE2 Ease Unemployment? originally appeared on BloggingStocks on Mon, 04 Oct 2010 10:40:00 EST. Please see our terms for use of feeds.

Continue reading Is the Fed's 'QE2' About to Leave the Port?

Is the Fed's 'QE2' About to Leave the Port? originally appeared on BloggingStocks on Wed, 22 Sep 2010 16:00:00 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 Labor Department reported that consumer prices rose 0.3% in August. The core Consumer Price Index (CPI) was flat.

These number suggest that inflation is subdued and does not pose an immediate threat to the economy. Now, analysts are speculating about Federal Reserve policies going forward.

The report on consumer prices follows a 0.4% rise in producer prices, after a 0.2% rise in July, as reported in the New York Times.

Continue reading Consumer Prices Flat in August; Inflation Is Subdued

Consumer Prices Flat in August; Inflation Is Subdued originally appeared on BloggingStocks on Fri, 17 Sep 2010 12:30:00 EST. Please see our terms for use of feeds.