Friday, September 23, 2011
Leading Economic Indicators Remain Weak
from Econompic blog:
While leading economic indicators expanded 0.3% during August, the expansion remains focused on areas controlled by monetary policy rather than the underlying economy. For the third month in a row (and four of the past five), indicators outside the Fed's control were negative.
Thursday, September 22, 2011
A Global Run for the Exits
Morning Morose: Stocks Collapse, Europe Near Freefall, Unemployment Rises
Unemployment claims again surprised to the upside, and more rumors that Europe is near collapse. And the Fed can't save us! The figures (top) above don't even show the day's lows, either!
Massive Sell-Off Ensues
Wednesday, September 21, 2011
Fed Statement, Market Reaction
About as expected! The Fed gave the market only the minimum of what was anticipated. I think the market was expecting even more, however. Should be interesting to see what happens over the next few days.
Full text:
Information received since the Federal Open Market Committee met in August indicates that economic growth remains slow. Recent indicators point to continuing weakness in overall labor market conditions, and the unemployment rate remains elevated. Household spending has been increasing at only a modest pace in recent months despite some recovery in sales of motor vehicles as supply-chain disruptions eased. Investment in nonresidential structures is still weak, and the housing sector remains depressed. However, business investment in equipment and software continues to expand. Inflation appears to have moderated since earlier in the year as prices of energy and some commodities have declined from their peaks. Longer-term inflation expectations have remained stable.
Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee continues to expect some pickup in the pace of recovery over coming quarters but anticipates that the unemployment rate will decline only gradually toward levels that the Committee judges to be consistent with its dual mandate. Moreover, there are significant downside risks to the economic outlook, including strains in global financial markets. The Committee also anticipates that inflation will settle, over coming quarters, at levels at or below those consistent with the Committee’s dual mandate as the effects of past energy and other commodity price increases dissipate further. However, the Committee will continue to pay close attention to the evolution of inflation and inflation expectations.
To support a stronger economic recovery and to help ensure that inflation, over time, is at levels consistent with the dual mandate, the Committee decided today to extend the average maturity of its holdings of securities. The Committee intends to purchase, by the end of June 2012, $400 billion of Treasury securities with remaining maturities of 6 years to 30 years and to sell an equal amount of Treasury securities with remaining maturities of 3 years or less. This program should put downward pressure on longer-term interest rates and help make broader financial conditions more accommodative. The Committee will regularly review the size and composition of its securities holdings and is prepared to adjust those holdings as appropriate.
To help support conditions in mortgage markets, the Committee will now reinvest principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities. In addition, the Committee will maintain its existing policy of rolling over maturing Treasury securities at auction.
The Committee also decided to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that economic conditions–including low rates of resource utilization and a subdued outlook for inflation over the medium run–are likely to warrant exceptionally low levels for the federal funds rate at least through mid-2013.
The Committee discussed the range of policy tools available to promote a stronger economic recovery in a context of price stability. It will continue to assess the economic outlook in light of incoming information and is prepared to employ its tools as appropriate.
Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Charles L. Evans; Sarah Bloom Raskin; Daniel K. Tarullo; and Janet L. Yellen. Voting against the action were Richard W. Fisher, Narayana Kocherlakota, and Charles I. Plosser, who did not support additional policy accommodation at this time.
Tuesday, September 20, 2011
Bullish Day
Stocks Leap on Greek Denial of Imminent Default, Fall Back Following Sharp IMF Economic Downgrade of U.S., Europe
The international lending organization expects the U.S. economy to grow just 1.5 percent this year and 1.8 percent in 2012. That's down from its June forecast of 2.5 percent in 2011 and 2.7 percent next year.
The IMF has also lowered its outlook for the 17 countries that use the euro. It predicts 1.6 percent growth this year and 1.1 percent next year, down from its June projections of 2 percent and 1.7 percent, respectively.
Monday, September 19, 2011
Stocks Begin Day Deep in Red
Sunday, September 18, 2011
Europe Sinks Into the Abyss
"The otherwise fractious European Union leaders have united in their criticism of the markets, the IMF and now (US Treasury Secretary) Tim Geithner -- for being honest about the scale of problems facing the eurozone," Sony Kapoor, head of the Re-define think tank, told AFP.
En route to New York and a frantic week at International Monetary Fund, World Bank and G20 gatherings, he said "kill the messenger seems to be the new strategy" for an EU "plagued by parochialism, pettiness and procrastination."
"This does not bode well for the ability of EU leaders to respond to the big and urgent challenge posed by the unsustainable borrowing costs facing Italy," the eurozone's third economy, he said.
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