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May 24, 2013
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The Federal Reserve – Chairman Ben S. Bernanke The Economic Outlook Before the Joint Economic Committee, U.S. Congress, Washington, D.C. May 22, 2013 Recognizing the drawbacks of persistently low rates, the FOMC actively seeks economic conditions consistent with sustainably higher interest rates. Unfortunately, withdrawing policy accommodation at this juncture would be highly unlikely to produce… Continue reading Piecing Together The Federal Reserve’s Muddled Message
The Wall Street Journal – Andy Kessler: The Fed Squeezes the Shadow-Banking System Here is the great economic paradox of our time: Despite the Federal Reserve’s vast, 4½-year program of quantitative easing, the economy is still weak, with unemployment still high and labor-force participation down. And with all the money pumped into the economy, why… Continue reading QE’s Effect On The Repo Market
<Click on chart for larger image> Comment Last night the Nikkei 225 fell over 1,100 points or 7%, it worst rout since the earthquake and tidal wave in March 2011. According to Bespoke, this was only the 10th decline of 7% or more in the last 50 years. The next story shows who bore the… Continue reading The Nikkei Crashes
Real Time Economics (WSJ Blog) – Four Reasons Housing Recovery Isn’t Yet Boosting Economy Those expecting a quick return to the “virtuous cycle” by which rising prices, home sales, and housing construction feeds further consumer spending will have to wait until Americans feel more comfortable borrowing and until banks feel more comfortable extending credit, according… Continue reading Where Is The Housing Wealth Effect?
The Wall Street Journal – Global Market Rout Spreads A 7.3% plunge in the Japanese stock market Thursday spilled into Europe, overshadowing moderately better economic data on the Continent and dragging down bourses in Frankfurt, London, Paris and Rome. Futures suggested that a lower open in the U.S. looms. After the tumult in Japan, investors… Continue reading The Markets Take Note Of Bernanke’s Testimony
The Financial Times – Falling inflation complicates the Fed’s QE exit plan Investors may be surprised to hear that concerns about excessively low inflation may be back on the Fed’s radar screen. After all, breakeven inflation expectations in the bond market have been fairly stable at above 2 per cent. But the Fed leadership has… Continue reading Deflationary Concerns
<Click on chart for larger image> Bloomberg.com – Caroline Baum: Are Obama’s Scandals Good for Investors? Washington is awash in scandals. The White House is fending off inquiries on three fronts: its response to the terrorist attack on a U.S. diplomatic outpost in Benghazi; the Internal Revenue Service’s scrutiny of conservative groups seeking tax exemptions;… Continue reading Gridlock Is Good
Charts of the Week Topics Covered This Week Include: Mutual Fund Flows S&P 500 And QE S&P 500 P/E Ratios Corporate Bond Issuance The Stock/Bond Relationship Junk vs Stocks Credit Spreads The Debt Ceiling Returns Is A Japan Crisis Coming? Are Gold ETFs Driving The Market? A Look At The Economy The Federal Reserve’s Balance… Continue reading Charts of the Week
The New York Federal Reserve – William Dudley: Lessons at the Zero Bound: The Japanese and U.S. Experience An important challenge for us will be to think carefully about what combination of actions and communications will best ensure that when we do eventually judge that it is appropriate to begin normalizing policy, the initial tightening… Continue reading The Federal Reserve’s Exit Plan, All Eyes On Bernanke
St. Louis Federal Reserve – St. Louis Fed’s Bullard Discusses Monetary Policy Options in a Low Policy Rate Environment During his presentation, Bullard said, “The most important monetary policy question during the last five years has been how to pursue easier monetary policy when the policy rate is already near zero.” He discussed several policy… Continue reading Bullard, Evans Discuss Policy Options