Search results for Federal Reserve
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Posted
Sep 25 2008, 03:14 PM
by
Charley Blaine
Rating:
Money Blog: Top Stocks Blog - MSN Money
Let me start by stating that CNBC's Jim Cramer can be loud, obnoxious, annoying and even -- as he would admit -- occasionally boorish.
His rant a year ago on how he thought the Federal Reserve was making a horrible mistake when it raised rates in the face of a global credit crunch is the stuff of legend. (Which is why CNBC plays it over and over and over again.)
But Cramer is a very smart guy, and he's offering the best explanation I've seen on why Congress and the White House should pass a financial rescue plan.
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Posted
Mar 16 2008, 07:37 PM
by
Charley Blaine
Rating:
Money Blog: Top Stocks Blog - MSN Money
The proposed sale of Bear Stearns on Sunday to JPMorgan Chase for $2 a share, or $236 million, will keep litigation lawyers busy for years as enraged shareholders seek to recover anything from the disaster.
The losses from Bear Stearns' demise are shocking, so shocking that Asian and Australian stocks tumbled on the news. The dollar was fallling. Crude oil jumped over $111 a barrel, and European shares were expected to open lower as was the U.S. stock market.
From a peak price of $171.52 in January 2007, Bear Stearns managed to lose 98.8% of its peak market value of $20.2 billion in less than 15 months, all because the company bet everything that the housing market and the markets for securities backed by subprime mortgages wouldn't break. It did
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Posted
Oct 13 2009, 12:05 PM
by
Anthony Mirhaydari
Rating:
Money Blog: Top Stocks Blog - MSN Money
While the primary trend for stocks continues to arch skyward, we are beginning to see equity traders react to some new developments over in the world of fixed-income, commodities, and currencies. This has made for choppy trading over the last few days.
Much of the catalyst for the recent gains in equities has been the depreciation of the U.S. dollar. Traders are using the greenback as a funding currency in carry trades with riskier, higher yielding assets because of super-low U.S. interest rates. They borrow dollars cheaply, sell them short, and use the proceeds to buy commodities and bonds in countries like Brazil and Australia.
They can do this with confidence because of the apparent support for dollar devaluation among officials in Washington -- who are hoping to boost employment by reviving the competitiveness of our exports -- along with prolonged support for low rates at the Federal Reserve.
With so much leverage at work
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Posted
Sep 23 2009, 02:08 PM
by
Anthony Mirhaydari
Rating:
Money Blog: Top Stocks Blog - MSN Money
Well, that was interesting. After the Federal Reserve announced on Wednesday it would leave interest rates unchanged, stocks initially bounded higher before abruptly shifting direction and screaming lower. The bulls gunned the Dow Industrial Average achingly close to the 10,000 level before things fell apart.
At issue wasn't the Fed's target policy rate, which affects short-term interest rates. Instead, traders were apparently concerned that Fed chairman Ben Bernanke and his cohorts failed to expand its direct purchases of mortgages and government debt. This will likely result in higher long-term rates.
You see, the Federal Reserve has been engaging in unorthodox monetary policy over the past 9 months via "Permanent Open Market Operations," or POMO. Fed traders were authorized in March to spend some $300 billion to buy U.S. Treasury debt and $1.45 trillion to buy mortgage-backed securities and debt from government-controlled housing lenders Fannie Mae and Freddie Mac. With the original budget on the Treasury allocation nearly exhausted, many wondered if the Fed will let the program expire, or renew it. Today we got our answer and Wall Street didn't like it.
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Posted
Feb 21 2008, 06:41 PM
by
Charley Blaine
Rating:
Money Blog: Top Stocks Blog - MSN Money
So, you're wondering, when is the stock market going to take off again? Didn't the market bottom in January and won't it just start up another bull run?
Maybe, but the charts are telling me something different. What they tell me is that the Standard & Poor's 500 is settling into a trading range of 1,300 to 1,365. The Dow and the Nasdaq charts offer similar hints. And that would actually be good news because it would imply a bottom is starting to form to the sell-off since October. For another look at the data, check out the Bonddad blog's analysis.
You'd better hope the market trades sideways for a while.
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Posted
Mar 11 2009, 11:59 AM
by
Anthony Mirhaydari
Rating:
Money Blog: Top Stocks Blog - MSN Money
Pity Alan Greenspan. He has quickly gone from economic superhero to the villain responsible for the housing debacle by holding interest rates too low between 2002 and 2004. In an effort to salvage his legacy, he penned an op-ed Wednesday arguing that the Federal Reserve isn't to blame for the housing mess.
The crux of his argument is that savers in Asian economies like China and Japan are responsible since they saved too much and invested heavily in U.S. Treasury bonds, thereby pushing down the long-term interest rates that mortgages are based on. Current Fed chair Ben Bernanke famously called this a "Global Savings Glut" back in 2005.
The Fed, on the other hand, isn't culpable according to Greenspan since it targets overnight interest rates that have a statistically insignificant relationship with mortgage rates. What this leaves out is how the massive growth in the money supply under Greenspan's Fed enabled the foreign investors he blames.
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Posted
May 14 2009, 08:18 AM
by
Andrew Rosenbaum
Rating:
Money Blog: Top Stocks Blog - MSN Money
What happened to our economic recovery? Recovery was supposed to be right around the corner, right?
The Federal Reserve and Treasury Secretary Timothy Geithner keep telling us that things will definitely get better soon -- the Fed says growth should start in the third quarter of this year.
But the most important indicators of that recovery are going in the wrong direction. Retail sales are down. The housing market is stagnant. Mortgage rates have moved higher.
Where are those "green shoots" of recovery that Fed Chairman Ben Bernanke is always talking about? Have they gone brown?
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Posted
Jan 29 2008, 02:08 PM
by
Douglas McIntyre
Rating:
Money Blog: Top Stocks Blog - MSN Money
The head of insurance regulation in New York is busy as a bee trying to bail out Ambac and MBIA. According to the FT, "Eric Dinallo, the New York state insurance superintendent, is being privately supported by the New York Federal Reserve Bank and other regulators." If the muni bond insurance companies go under it could lead to a new round of fixed income instruments write-offs which would hurt Wall Street balance sheets.
If the government is going to drag the muni bond insurance companies out of their mess, why not a little help for the likes of Citigroup, Washington Mutual, and Wells Fargo?
Mr. Dinallo is attempting to get the big U.S. banks to provide the bond insurers with $15 billion in credit to shore up their balance sheets. It is an interesting proposal but it does beg the question of where the cash-strapped banks will get the money. It could be the beginning of a 21st Century version of borrowing from Peter to pay Paul.
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Posted
Sep 22 2008, 07:30 AM
by
Andrew Horowitz
Rating:
Money Blog: Top Stocks Blog - MSN Money
 Reckless, gluttonous, disgusting and shocking are only a few of the words used over the weekend to describe the amazing bailout of the financial sector. A "mere" $700 billion is what we're told is needed to stabilize the sector. Unfortunately, it does not end there. Ponder the number again for a moment: $700,000,000,000.
Anyway you look at it, it is an enormous sum of money and the problem is that you and I will ultimately be responsible for the repayment. Of course this is on top of an already stretched deficit that will very soon balloon to at least $11.3 trillion if the bailout package is passed into law.
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Posted
May 21 2008, 04:49 PM
by
Charley Blaine
Rating:
Money Blog: Top Stocks Blog - MSN Money
A week ago, I blogged that the stock market rally from mid-March could continue for some time -- if oil prices would cooperate.
They haven't. Crude oil closed Wednesday at $133.17 a barrel, and stocks tumbled, with the Dow Jones Industrial Average falling 227 points. Things could get worse.
Here's why the stock market could test the lows of mid-March, amid the worst of the Bear Stearns crisis:
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