Federal Reserve System

Article Index

The Interest Rates That Really Count Already Moved - and It's a Disaster

By , Liquidity Specialist, Money Morning -

DJIA news

Wall Street and the media breathlessly waited for Yellen & Co. to hike the fed funds target from 0% to 0.25% up to 0.25% to 0.50% - a move that's been telegraphed for months and largely already priced in to the ZIRP-addled markets.

The drama around this move was manufactured. You can't call those rates anything but accommodative.

But with so much focus on the fed funds rate, it's really not surprising that the media missed the fact that the really important rates have been on the move since July.

Meanwhile, "overnight money," money that the central bank loans overnight to banks (and which the Fed influences through open market operations), has barely budged.

We're looking at a liquidity crunch like nothing we've ever seen before. Here's how it happened and how bad it's likely to get...

How We'll Capitalize on Fed Cowardice

By , Global Credit Strategist, Money Morning • @MichaelELewitt -

Markets delivered a resounding Bronx cheer to the Federal Reserve on Friday after that confederacy of dunces failed to raise interest rates at its highly anticipated, two-day September meeting.

The Dow Jones Industrial Average plunged by 290 points (1.74%), while the S&P 500 followed by 32 points (1.62%), and the Nasdaq Composite Index dropped by 67 points (1.32%).

On the week, the Dow lost only 49 points, or 0.3%, to close at 16,384.79, while the S&P 500 shed only 3 points, or 0.2%, to end at 1,958.03. Both indices remain down on the year.

The tech-heavy Nasdaq managed to eke out a five point, or 0.1%, gain on the week to close at 4,827.23 and remain up on the year.

What America Would Be Like Without the Federal Reserve

By , Chief Investment Strategist, Money Morning • @ShahGilani_TW -

I have a dream. Well, I had a dream, but maybe it's never coming true, so I'll revel in my real dream.

And what a dream it was...

America had changed overnight. I didn't know what had happened, but everything was different the morning I woke up (while I was, unfortunately, still in my dream).

The sky and atmosphere were different. There was a sense of clarity, of transparency.

I had to walk into town; something told me to go there.

Wait till you see what I found...

How the Federal Reserve Is Killing America

By , Chief Investment Strategist, Money Morning • @ShahGilani_TW -

Federal Reserve

It's maddening. Our economy is stagnating. The divide between haves and have-nots is widening every day. There are fewer and fewer good jobs and careers to be had. What the heck happened?

The U.S. Federal Reserve System is killing America. It has destroyed the economy. It has undermined savers and retirees. It is even responsible for the corruption in Congress.

We have to kill the Fed before it kills America for good.

Dow Jones Futures Rise 40 Points; Here Are 8 Stories to Know Before Market Open

By , Executive Producer, Money Morning -

Dow Jones Futures

Stock market news today, August 21, 2014: Dow Jones futures were up 40 points (0.24%) this morning (Thursday). S&P futures gained 3.75 points (0.19%) and Nasdaq futures were also up 5.25 points (0.13%).

Yesterday saw the release of minutes from the most recent Federal Open Market Committee meeting in July. The minutes revealed that the U.S. Federal Reserve was impressed by job market's resilience, but still decided to wait on its decision of when it will raise interest rates.

Here are the top eight stories in the stock market today...

How Will Today's FOMC Meeting Minutes Move the Markets?

By , Associate Editor, Money Morning • @JimBach22 -

FOMC meeting Fed logo

The U.S. Federal Reserve's Federal Open Market Committee (FOMC) meeting minutes from July will be released this afternoon and once again the nation's central bank won't be looking to pull any tricks.

All in all, the announcements this year out of the Fed have been predictable, and current Fed chairwoman Janet Yellen has continued to follow the same path that her predecessor Bernanke left her when he departed from the post in February.

But even the predictable Fed talk can be felt on Wall Street...

FOMC Meeting: Watch for "Half-Baked Data" Supporting Lower Rates

By , Associate Editor, Money Morning • @JimBach22 -

The U.S. Federal Reserve will convene its two-day Federal Open Market Committee (FOMC) meeting today (Tuesday), its fourth of the year and the third with Fed Chairwoman Janet Yellen in charge.

The FOMC is expected to announce a further reduction in the Fed's ongoing asset-buying program, but the real question is where short-term interest rates are headed.

Here's what to expect...

This Has Been Making Investors Rich for 140 Years

By , Chief Investment Strategist, Money Map Report -

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

This Chart Will Save You from a Dangerously Popular Delusion

By , Chief Investment Strategist, Money Map Report -

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...

Time to Buy These "Out of Print" Assets

By , Money Morning -

From the Editor: We've been tracking this threat for years, ever since Keith Fitz-Gerald brought it to your attention back in January 2010. Today, Resources Specialist Peter Krauth weighs in on some recent developments in this story, because three of the commodities he covers can protect you. The Fed can't print these things... Here's Peter:
Central banks may have foolish policies, but central bankers are no dummies.
They know exactly what they're doing. They even comprehend a few of the implications, too.
Which is why it's interesting that some American central bankers have suggested doing away with the debt ceiling altogether.
Famed investor Marc Faber recently said, "The question is not tapering. The question is at what point will they increase the asset purchases to say $150 [billion], $200 [billion], a trillion dollars a month."
Faber expects the Fed's current QE4 to become "QE4-ever."
That could mean years of money printing and ultra-low rates.
Even bond king Bill Gross recently chimed in his latest monthly outlook that "The United States (and global economy) may have to get used to financially repressive - and therefore low policy rates - for decades to come."
Either way, don't depend on the Fed to save you. You can save yourself

And now you'll need to...

Fed Strategy from Mohammed Ali

By , Chief Investment Strategist, Money Map Report -

Bernanke's actions last week - failing to taper, yet still trying to maintain the illusion that QE is a good thing - are setting up a one-two punch that's not unlike boxing champion Mohammed Ali's famous "float like a butterfly, sting like a bee" approach.

If you recall, Ali was a master of the combination - some say the best ever. He loved to bring his opponents in close. Ali could see through the duplicity of his opponents' strategy and land punches that won decisively.

Ali did that using combinations that were based in fighting terms on two contrasts: high-low or short-long, or even left and right. He pressed every advantage he could find, even when others thought there were none to be had. Knowing he wanted to go the full 15 rounds, Ali developed a strategy that would become known as the "rope-a-dope" as a means of tiring out his opponents early on, then vanquishing them in later rounds when the fight really began.

I think we should take a page from Ali's playbook and split the "fight" Bernanke's presented us with into two distinct time zones: the current "round," and those that happen down the line. One short. One long.

Is that possible?

Absolutely. What's more, it's easy to do.

First, though, put yourself in Bernanke's place...

How the Fed QE Taper Will Affect Foreign Markets

By , Executive Producer, Money Morning -

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...