- This Has Been Making Investors Rich for 140 Years People are viewing the end of stimulus as a sunset. "My, what a wonderful day we've had," they say. What they should be doing is investing for tomorrow's dawn - the turmoil we're seeing now as part of Yellen's arrival is actually par for the course. It's also a great time to lock your sights on four companies that will lead the way when the smoke clears... Full Story Read More...
- This Chart Will Save You from a Dangerously Popular Delusion There's a very dangerous meme making the rounds. It goes something like this: The economy is improving, therefore the Fed's going to taper... and, when it does, the economy is strong enough to endure the withdrawals that will come with it. Don't fall for it. Nothing could be farther from the truth. Any amount of stimulus reduction will indeed trigger a "taper tantrum." This chart is all the proof we need...
- The Chart the Federal Reserve Doesn't Want You to See While the Federal Reserve is going full steam ahead with its money printing, a rule that applies to all central banks says it should be doing the exact opposite. Apparently the Fed plans to keep its collective head buried deep in the sand until everything blows up. Here's the chart the Fed wishes didn't exist...
- How the Fed QE Taper Will Affect Foreign Markets Hints from the U.S. Federal Reserve this week that the quantitative easing taper is near ruffled feathers on Wall Street last week - but the idea of less Fed stimulus has caused much more turmoil in certain overseas markets. Here are the places getting hit the hardest. Read more... Read More...
Check Out What the FOMC Meeting Minutes Did to the Stock Market Today
In one of the most highly anticipated releases of the year, the Federal Open Market Committee (FOMC) meeting minutes from July 30-31 were released today (Wednesday).
They will be picked apart for days - but here's what you need to know.Read More...
- FOMC Meeting: Fed Just Backtracked on QE Taper Talk After the two-day FOMC meeting, the committee just backtracked on all the previous taper talk - here's why the Fed might be "winging it." Read more... Read More...
Exclusive: Obama Tells Money Morning Why He Just Loves Larry Summers…
Larry Summers for Fed Chief... He's got my vote. Absolutely!
Why? You just have to get to know the guy and you'll see he's perfectly qualified to head the Federal Reserve.
Here's just part of his resume.
From 1982-1983, Larry Summers was on staff at Ronald Reagan's Council of Economic Advisers. That's where Lawrence of Enablers earned his "Deregulate Everything" T-shirt.
After his brief stint on the Gipper's Council, where he was taught how real pros corral free markets for personal profit, the Enabler headed back to Harvard to teach kids (and himself) how to squeeze personal wealth out of mere economic theory.
He got his next shot at stardom as Chief Economist of the World Bank in 1991. He was there until 1993.
While there he wasted no time shining a light on himself.
In a 1991 interview he famously said:
Read on here... Read More...
- Esther George on Why It's Time to Begin Adjusting QE Esther George, Kansas City Fed President, is a hawk among doves. Here’s why she’s concerned about what’s ahead for the economy, thanks to QE. Read more... Read More...
Another Big Fed Week: The Bernanke Monetary Policy Testimony to Congress
There's a key market-moving event this week investors can't miss: the semi-annual Ben Bernanke monetary policy testimony before Congress on Wednesday (House) and Thursday (Senate).
Congressional legislation known as Humphrey-Hawkins (now expired) required the Federal Reserve's Open Market Committee to report to Congress on both the state of the U.S. economy and monetary policy twice a year (February and July). The Fed Chairman testifies before Congress in conjunction with the report.
Traditionally, it had been one of the most important public appearances by the Fed Chairman, back when speeches were rare. But now with news conferences after many Fed meetings, these appearances are less important.
However, this time may be different, as it will be Ben Bernanke's last time in front of Congress before his term ends in 2014. The testimony may once again be a market moving event due to the market's recent concern about the Fed's 'tapering' of quantitative easing (QE).
Which Ben Will Deliver the Monetary Policy Testimony?
The markets have been confused lately by seemingly contradictory statements coming from various Fed members and particularly from Bernanke himself.
In fact, Bernanke's actions lately remind me of Batman villain Two-Face, aka former District Attorney Harvey Dent.
For example, one time he said that winding down QE may happen as soon as the middle of next year. But then, like last week, he flips saying the Fed will not taper the $85 billion a month bond purchasing plan until the U.S. economy is stronger.
He said, "highly accommodative monetary policy for the foreseeable future is what's needed [for the economy]."
Bernanke added that there would not be an automatic rise in interest rates either when the U.S. unemployment hit the Fed's target of 6.5%.
These statements sent the stock market solidly higher with both the S&P 500 and the Dow Industrials nearing their record highs. The S&P 500 and Dow Jones Industrial Average hit new record highs Monday closing at 1,682.50 and 15,484.26.
Traders believe the 'Bernanke put' was back in play. That is, Bernanke will do everything he can to keep stock prices higher.
So which Ben Bernanke will testify before Congress this week? Accommodative Ben or Tightening Ben?Read More...
Your Best Strategy for Playing This QE Rally
Even as stocks and bonds continue to digest the concept of rising rates and the end of quantitative easing, there are still some great opportunities to land some big gains before any real trouble hits the markets.
QE may be fading away but that doesn't mean you can't profit... Read More...
- Stay the Course with Gold as Mixed Signals Move Markets Gold has become extremely oversold as it falls below $1,200 an ounce. But based on simple math, it’s due for a reversal… Read more... Read More...
Top 5 Choices for the Next Fed Chief Leave Much to Be Desired
After President Barack Obama all but fired U.S. Federal Reserve Chairman Ben Bernanke in a recent television interview, everyone's been trying to figure out who the president will name as the next Fed chief next year.
Of course, Money Morning has long been critical of the Bernanke-led Fed, and in particular its easy money policies of recent years -- namely its zero interest rates and waves of quantitative easing (QE) that have added trillions to the Fed's balance sheet.
That debt, the asset bubbles it has created and the Fed's too-cozy relationship with the Big Banks, has prompted the experts at Money Morning to question whether the Federal Reserve should exist at all.
"I believe the Fed is outmoded and should be disbanded," said Money Morning Chief Investment Strategist Keith Fitz-Gerald, who recently wrote about whether the Fed is necessary. "It's a financial body that has outlived its usefulness and is merely causing us to lurch from crisis to crisis. Barring any change in the notion of what it's there to do, get rid of it."
Still, for the time being, we're stuck with the Federal Reserve. And the next Fed chief - whoever President Obama appoints in January -- will be setting monetary policy for at least the next four years.
One thing's for sure: Anyone who dislikes how Bernanke has run the central bank probably won't be happy with the next Fed chairman either.
As confounding as it seems now, it was not the liberal Democrat President Obama, but Republican President George W. Bush who first appointed Bernanke to head the Federal Reserve in 2006.
That Obama re-appointed Bernanke in 2010 made sense, as they share a similar Keynesian economic philosophy. That is, they both think the best way to help a weak economy is through massive government spending no matter how much debt piles up.
So while Bernanke may be on his way out the door, you can bet that whoever President Obama chooses as the next Fed chief will be just as much of a Keynesian as Bernanke has been - and maybe more so.
Heaven help us.Read More...
The Fed Or the Fundamentals? What's Behind Stock Market Moves?
What's driving the stock market - the Fed or company fundamentals?
The answer, of course, depends whom you ask.
Has most or all of the growth in the market over the past few years been due to the Fed's massive QE easy money stimulus?
Or is it fundamentals like earnings per share and the price/earnings ratio?
We asked three experts to weigh in: Money Morning Chief Investment Strategist Keith Fitz-Gerald, Money Morning Capital Wave Strategist Shah Gilani and Brian Wesbury, the chief economist at First Trust Advisors.
Here's their take.Read More...