I had a strange feeling of deja vu as I left work on Friday. MF Global had dropped precipitously after a poor second quarter earnings report came out on Tuesday and there were numerous reports that they were looking to sell. Then on Friday word came out that ratings agency Fitch had downgraded their debt to junk status. (more…)
I am not sure what to make of the letter sent to Fed Chairman Ben Bernanke from the four Republican Congressional leaders expressing their concern over any additional stimulus from the Fed.
Some Democrats have already expressed outrage that the GOP leadership is trying to strong arm the Fed and challenge its independence. Many believe the GOP is simply trying to prevent anything that can help improve the economy before next year’s election. Others may simply believe it is high time that this unelected powerful body is reined in.
The Federal Reserve’s Federal Open Markets Committee (FOMC) shook up the markets with its statement on Tuesday that it would likely keep rates exceptionally low through mid-2013. This prompted three dissenting votes, which may have had more to do with the volatile reaction than the actual announcement. However, the announcement is pretty remarkable.
The Fed is telling us that it will maintain a zero interest rate policy—the same emergency policy that has been with us since December 2008 — for nearly two more years. (more…)
Federal Reserve Chairman Ben Bernanke was subjected to journalists questions for the second time yesterday when he hosted the second post-FOMC press conference. As was expected going into the meeting, the Fed made no change to the Federal Funds rate or their plans to alter the second round of quantitative easing. This came as no surprise given the recent bout of bad economic numbers in nearly every sector.
Well now the United Nations has wandered into the analysis of what is going on in commodity markets, releasing a report this week, and appears to have fallen into the blame speculators camp. While I did not read the 80-page report cover to cover, some of the recommendations in the UNCTAD (United Nations Conference on Trade and Development) report are downright scary.
Just as we began to have serious discussions regarding a Fed exit strategy, the economy gets hit with a series of very poor economic reports and we are hearing chatter about a double dip recession.
Today’s employment situation report showed growth in nonfarm payrolls of 54,000, about 120,000 fewer than were expected and that expectation was dropped this week due to other weak economic news. Namely Wednesday’s Institute For Supply Management’s (ISM) manufacturing index.
There seems to be some debate over whether Federal Reserve Board Chairman Ben Bernanke closed the door on additional quantitative easing or not during the Federal Reserve’s first ever press conference this week. The statement put out by the Fed prior to the press conference simply indicated that QE2 would be completed on schedule in June but added, “The Committee will regularly review the size and composition of its securities holdings in light of incoming information and is prepared to adjust those holdings as needed to best foster maximum employment and price stability.”
On a day that saw the Dow Jones Industrial Average reach its highest close since June 5 (nearly three years/see chart) and yet the sector which is most responsible for the Great Recession—housing—continues to exhibit weakness, all the talk is on tomorrow’s first ever Fed Chairman press conference following the Federal Open Market’s Committee (FOMC) meeting.
Did you ever have a friend who is in the know of what “everybody” or “they” say? You know the type. People who like to make broad arguments and assume it is universally supported by some mysteriously random authority.
I thought of this when reading a report in Crain’s this week of how, surprisingly, Citadel CEO Ken Griffin came out in support of Dodd-Frank. The problem is Griffin came out in support of Dodd-Frank months ago, a point we made at the time. And he is not the only one. Other managers and investment professionals have supported putting more restrictions on markets, particularly over-the-counter markets.
“The greatest tragedy would be to accept the refrain that no one could have seen this coming and thus nothing could have been done. If we accept this notion, it will happen again…. It falls to us to make different choices if we want different results.”
These are the words of the task force that wrote the Financial Crisis Inquiry Report released in January. These 10 commissioners were tasked by Congress to determine what caused the 2008 financial meltdown. After hearing about possible exemptions of certain firms from the Dodd-Frank Act by those in Congress, I read this report. It irks me that some of those responsible are the loudest naysayers of reform. Even the task force notes: “Some on Wall Street and in Washington with a stake in the status quo may be tempted to wipe from memory the events of this crisis….” So let’s have at it…what were the group’s main conclusions? (more…)
