Federal Reserve

“‘d Be A Fool To Hold Anything But Cash Now”

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Interesting interview with David Stockman the other day.  The Ex-White House budget director expresses some extremely strong feelings about the direction this country is headed in the upcoming months.  Considering his prediction of an event of epic proportions, wouldn’t you rather be on the right side of the trade than out of the market entirely..? Now 65 and gray, but still wearing his trademark owlish glasses, Stockman took time from writing his book about the financial collapse, “The Triumph of Crony Capitalism,” to talk to The Associated Press at his book-lined home in Greenwich, Conn: Q: You sound as if … Read more

Pension Pulse: Hidden Burden of Ultra-Low Interest Rates?

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Guest Post By: Leo Kolivakis via Pension Pulse: Hidden Burden of Ultra-Low Interest Rates?.   Matthew Philips and Dakin Campbell of Bloomberg report, Banks Join Pensions in Squeeze as Federal Reserve’s Low Rates Erode Profit:   The Federal Reserve, which cut its target for the federal funds rate to a zero-to-0.25 percent range on Dec. 16, 2008, said last month that rates would remain “exceptionally low” at least through late 2014. While the unprecedented period of near-zero rates is meant to aid an ailing economy, it poses challenges for banks, insurers, pension funds, and savers. The hope is that by making mortgages and … Read more

Einhorn Ends 2011 Just Over +2%, Closes FSLR Short, Warns On Asia, Mocks “Lather. Rinse. Repeat” Broken Markets

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Anyone wondering why FSLR just jumped, it is because as was just made known, David Einhorn’s Greenlight has decided to close its FSLR position, after bleeding that particular corpse dry. “Our largest winner by far was our short of First Solar (FSLR) which fell from $130.14 to $33.76 paper share and was the worst performing stock in the S&P 500.” Einhorn also announces that he was among the “evil” hedge funds who dared to provide market clearing transparency and buy CDS on insolvent European governments: “We also did well investing in various credit default swaps on European sovereign debt.” As … Read more

U.S. recovery still on ropes in late summer: Fed

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(Reuters) – The sluggish U.S. recovery failed to gain speed in recent weeks and softened in some areas of the country, as volatile stock markets and sputtering factory activity weighed on growth, the Federal Reserve said on Wednesday. “Economic activity continued to expand at a modest pace, though some Districts noted mixed or weakening activity,” the Fed said in its Beige Book collection of anecdotal reports of economic conditions in the Fed’s 12 districts. A sharp decline in stock markets since mid-July and increased economic uncertainty have made businesses gloomier about the outlook in several regions, the Fed said. Growth was modest … Read more

The Fed’s Toolkit Revealed

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The slowdown in US growth has raised speculation the US Federal Reserve may have to provide additional monetary support to the economy, and the Fed Chairman say they are monitoring the issues and standing by. With interest rates already effectively Zero and the Fed’s balance sheet at a record US$2.85-T, US central bank officials has not acted yet to stimulate economic activity further yet. Persistent unemployment and new turbulence in financial markets has added pressure on the Fed to do something. US Fed Chairman Ben Bernanke noted last week that the Fed is prepared to respond to possible further weakness. … Read more

Investors trade in tight range ahead of Bernanke speech

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(Reuters) – World stocksedged up and oil advanced on Wednesday as investors tried to position themselves ahead of a Federal Reserve Chairman Ben Bernanke’s key speech. The gains follows weeks of market turmoil, with disappointing U.S. economic news and escalating worries about the debt crisis in Europe hitting sentiment. Benchmark stock indexes are on track for their worst month since the fall of 2008, after the Lehman Brother fall. World stocks as measured by MSCI .MIWD00000PUS were up 0.1 percent on the day but were on track for a 10.3 percent year-to-date loss. The U.S. benchmark Standard & Poor’s 500 … Read more

FRBSF Economic Letter: Boomer Retirement: Headwinds for U.S. Equity Markets? (2011-26, 8/22/2011)

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Boomer Retirement: Headwinds for U.S. Equity Markets? By Zheng Liu and Mark M. Spiegel Historical data indicate a strong relationship between the age distribution of the U.S. population and stock market performance. A key demographic trend is the aging of the baby boom generation. As they reach retirement age, they are likely to shift from buying stocks to selling their equity holdings to finance retirement. Statistical models suggest that this shift could be a factor holding down equity valuations over the next two decades. via FRBSF Economic Letter: Boomer Retirement: Headwinds for U.S. Equity Markets? (2011-26, 8/22/2011).

Markets Rally Ahead of Fed News

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US shares add to gains on anticipation of Fed action US Stocks are rallying Tuesday, with the S&P 500 and the NAS up more than 2%, as buyers emerged before a highly anticipated address by US Federal Reserve Chairman Ben Bernanke later this week. Technology and other growth stocks drove much of the market’s gains, with the S&P Information Technology Index .GSPF up 2.4%. A weaker-than-expected reading of the US housing sector was the latest in a string of discouraging data that has raised expectations the US Fed will take measures to prop up the economy. New US single-family home … Read more

‘ U.S. units

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(Reuters) – The Federal Reserve Bank is taking a closer look at the U.S. units of Europe’s biggest banks, concerned that a euro zonedebt crisis could spill into the U.S. banking system, the Wall Street Journal reported. The $2.5 trillion U.S. money market funds industry — which supplies short-term dollar funding to banks — has retreated from the euro zone in recent months, concerned that the continent’s debt crisis is spiraling out of control. That and the drying up of interbank lending has led to a trebling of dollar funding costs for euro zone banks in the last month. One … Read more

Fed Faces Criticism as Political Season Intensifies

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  Don’t mess with Texas, at least when it comes t0 monetary policy. Rick Perry, the latest entrant into the race for the Republican presidential nomination and already among the frontrunners, fired a shot across the bow of the Federal Reserve Monday. “If this guy prints more money between now and the election,” the Lone Star state’s governor said “it would be almost…treasonous.” That kind of scathing criticism of the Fed usually was leveled behind closed doors. In the same Texas tradition, in the 1960s President Lyndon B. Johnson excoriated then-Fed Chairman William McChesney Martin for raising interest. But that … Read more

‘s Lockhart says U.S. recession risks have risen

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(Reuters) – The risk of a new U.S. recession has risen over the last couple of months, but an outright contraction will most likely be avoided, Atlanta Federal Reserve Bank President Dennis Lockhart said on Monday. Lockhart said there is plenty the central bank could do if the economydoes deteriorate further, including ramping up asset purchases or shifting their composition. Recent market volatility, driven in part by concerns of slowing economies both in the United States and Europe, threatens consumer confidence and could put a crimp on spending, Lockhart told a Rotary Club meeting. “The events of the last several weeks … Read more

Fed Said to Follow Basel Capital Rules for Biggest U.S. Banks

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Aug. 10 (Bloomberg) — Federal Reserve officials are drafting rules for the biggest U.S. banks that won’t be more stringent than international capital standards agreed to in Basel, Switzerland, according to a person familiar with the discussions. Federal Reserve Governor Daniel Tarullo cited a “goal of congruence” between the Basel standards and the Fed’s work on rules under the Dodd-Frank Act, which overhauls banking regulation, in a June 3 speech. The central bank hasn’t veered from that, according to the person, who declined to be identified because the rules are still being drafted. The Basel Committee on Banking Supervision, which … Read more

‘s Business as Usual

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    Federal Reserve officials publicly declared it was business as usual in the face of Standard and Poor’s downgrade of US government debt, but privately they acknowledged these were unchartered waters. Within 90 minutes of S&P’s decision, a joint release from US banking regulators declared that, despite the downgrade of US paper, there would be no change in the risk-weighting of treasury bills, bonds and notes or any paper guaranteed by the US government. In other words, banks do not have to post any additional capital against their Treasury positions. Regulators also announced that the treatment of US treasuries … Read more

Time For More Fed Action?

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With the economy still weak and the politicians unable to agree on a plan to lift the debt ceiling, it might be time for the Federal Reserve to embark on QE3. Before you think I have lost my mind, please examine the three facts listed below. First and most important, the economy — supposedly out of recession for two years — is not in good shape. After rising at a paltry rate of 1.9% in the first quarter, the gross domestic product likely crept ahead at an even slower pace in the second, according to the MarketWatch consensus. This is … Read more

‘s Press Conference, No Rate Hike Until July 2012?

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Yesterday was a historic day. The Federal Reserve gave their first press conference, ever. Below is the actual full press conference so you can watch for yourselves, in full. What are your thoughts on how Ben handled the issues at hand? Barclays Capital looks does not look for the Federal Reserve to hike interest rates until the summer of 2012 and says the loose monetary policy in the meantime should remain supportive for gold. Prices rose after a Wednesday FOMC statement that said rates will remain low for an “extended time,” with gold hitting a fresh record overnight and silver also … Read more