Posts
Tuesday, September 10, 2013
MARKETS RISE, INTEREST RATES SURGE TO END A HORRIBLE WEEK: Here's What You Need To Know (DIA, SPY, QQQ, USO, TLT)
You are using an outdated version of Internet Explorer. For security reasons you should upgrade your browser. Please go to Windows Updates and install the latest version. Continue to Business Insider »You will be redirected in seconds.
Wall Street's Brightest Minds Reveal THE MOST IMPORTANT CHARTS IN THE WORLD
REUTERS/Brendan McDermid, Business InsiderHere they are: the most important charts in the world. We asked our favorite analysts, traders, economists, and strategists across the Street for the charts that they deem the most important right now, and this is what they sent us.
A lot of the focus is on fixed income – specifically, what is going on in the U.S. Treasury market. The sell-off there over the past several weeks and the attendant rise in bond yields has had violent implications in financial markets around the world.
But there are a lot of other things going on as well.
WORD FOR WORD: Here's Exactly What Bernanke Said That's Driving The Global Markets Crazy
REUTERS/Jason ReedU.S. Federal Reserve Chairman Ben Bernanke speaks to the press following the Fed's two-day policy meeting at the Federal Reserve in Washington, June 19, 2013.Stocks, bonds, commodities, and currencies around the world have been going totally crazy ever since Wednesday when Federal Reserve Ben Bernanke suggested that the Fed could begin to taper, or scale back, its stimulative monthly purchases of $85 billion worth of bonds.
However, his statement had a lot of conditions attached to it.
Unfortunately, people have already begun to put words into the Chairman's mouth. So before any more misinformation is spread, here's word-for-word exactly what he said before and after he laid out a timeline for the taper (emphasis added to the only part people seem to cite):
...Although the Committee left the pace of purchases unchanged at today's meeting, it has stated that it may vary the pace of purchases as economic conditions evolve. Any such change will reflect the incoming data and their implications for the outlook, as well as the cumulative progress made toward the Committee's objectives since the program began in September. Going forward, the economic outcomes that the Committee sees as most likely involve continuing gains in labor markets, supported by moderate growth that picks up over the next several quarters as the near-term restraint from fiscal policy and other headwinds diminishes. We also see inflation moving back toward our 2 percent objective over time. If the incoming data are broadly consistent with this forecast, the Committee currently anticipates that it would be appropriate to moderate the monthly pace of purchases later this year; and if the subsequent data remain broadly aligned with our current expectations for the economy, we would continue to reduce the pace of purchases in measured steps through the first half of next year, ending purchases around midyear. In this scenario, when asset purchases ultimately come to an end, the unemployment rate would likely be in the vicinity of 7 percent, with solid economic growth supporting further job gains, a substantial improvement from the 8.1 percent unemployment rate that prevailed when the Committee announced this program.
I would like to emphasize once more the point that our policy is in no way predetermined and will depend on the incoming data and the evolution of the outlook, as well as on the cumulative progress toward our objectives. If conditions improve faster than expected, the pace of asset purchases could be reduced somewhat more quickly. If the outlook becomes less favorable, on the other hand, or if financial conditions are judged to be inconsistent with further progress in the labor markets, reductions in the pace of purchases could be delayed; indeed, should it be needed, the Committee would be prepared to employ all of its tools, including an increase in the pace of purchases for a time, to promote a return to maximum employment in a context of price stability.
It's also worth noting here that, even if a modest reduction in the pace of asset purchases occurs, we would not be shrinking the Federal Reserve's portfolio of securities but only slowing the pace at which we are adding to the portfolio, while continuing to reinvest principal payments and proceeds from maturing holdings as well. These large and growing holdings will continue to put downward pressure on longer-term interest rates. To use the analogy of driving an automobile, any slowing in the pace of purchases will be a kin to letting up a bit on the gas pedal as the car picks up speed, not to beginning to apply the brakes.
I will close by drawing again the important distinction between the Committee's decisions about adjusting the pace of asset purchases and its forward guidance regarding the target for the federal funds rate. As I mentioned, the current level of the federal funds rate target is likely to remain appropriate for a considerable period after asset purchases are concluded. To return to the driving analogy, if the incoming data support the view that the economy is able to sustain a reasonable cruising speed, we will ease the pressure on the accelerator by gradually reducing the pace of purchases. However, any need to consider applying the brakes by raising short-term rates is still far in the future. In any case, no matter how conditions may evolve, the Federal Reserve remains committed to fostering substantial improvement in the outlook for the labor market in a context of price stability.
Perhaps the most important thing he said here was:
...I would like to emphasize once more the point that our policy is in no way predetermined and will depend on the incoming data and the evolution of the outlook...
In other words, any forecasts Bernanke makes is subject to error and revisions.
Here's a link to the whole transcript:
http://www.federalreserve.gov/mediacenter/files/FOMCpresconf20130619.pdf
9 Charts That Every Beer Aficionado Will Love
You are using an outdated version of Internet Explorer. For security reasons you should upgrade your browser. Please go to Windows Updates and install the latest version. Continue to Business Insider »You will be redirected in seconds.
10 Reasons Why America Will Continue To Dominate The Global Economy
The U.S. economy is in recovery mode right now.
Sure, investors have been spooked by Fed taper talks, the Bank of Japan's unprecedented economic experiment, persistent jitters out of Europe, and concerns of a credit crisis in China.
But by in large, investors should be pleased with the way things are going domestically, according to a new report from Joseph Quinlan, Chief Market Strategist for U.S. Trust.
We walk you through U.S. Trust's 10 theses that show "what's right with America."
1) The U.S. economy is the largest and most productive in the world - The U.S. accounts for one-fifth of global GDP with only 4.5% of the world's population. America's economy is nearly twice the size of China's in nominal dollars. Plus, the U.S. is one of just a few developed countries with real GDP higher than it was before the crisis, according to the report.
U.S. Trust2) The U.S. leads the world in manufactured goods - Nominal manufacturing output totaled $1.9 trillion in 2012, a rise of 27% from 2009. Employment in the sector has increased by 500,000 workers since 2010, according to U.S. Trust.
U.S. Trust3) The U.S. is among the largest exporters of goods and services - Exports since the recession have taken off. In 2012, total exports totaled $2.2 trillion, nearly a 40% rise from 2009 levels, according to the report.
U.S. Trust4) Foreign investors still love the U.S.- U.S. Foreign Direct Investment inflows in the post-crisis years racked up $736 billion. That's 15% of the global total, according to U.S. Trust. And while people talk about investment in China, America is still on top by a landslide.
U.S. Trust5) America has the top global brands - In 2008, eight out of 10 of the world's top brands were American.
U.S. Trusts6) The U.S. is the world leader in technology - People still flock to America to become tech innovators. The U.S. is home to the major social media players and beats out other countries in spending levels.
U.S. Trusts7) America has the world's best colleges - American college kids fill their minds with kegs worth of knowledge at some of the world's best universities. Six out of the top 10 universities in the 2012 Quacquarelli Symonds World Rankings’ were American.
U.S. Trusts8) The U.S. dollar is king - It's the world's reserve currency. From the U.S. Trust report: "The greenback accounted for roughly 62% of global central bank reserves as of the fourth quarter of 2012, according to the IMF, a share down slightly from 2008 but relatively constant over the post-crisis years." It crushed the beleaguered Euro.
U.S. Trusts9) The U.S. has one of the most competitive economies - In the latest competitiveness survey from the World Economic Forum, the U.S. slipped to seventh place, down two spots, according to the report. Still, U.S. Trust guesses America will head north on the list in the future.
U.S. Trusts10) America is in the middle of an energy Renaissance - Much to the chagrin of some environmentalists, U.S. domestic oil production is in revival mode. It exceeded imports for the first time in 16 years, according to the report. Thanks to "fracking" that unlocked shale in North Dakota, Oklahoma, and Texas, the U.S. has seen a major surge in production, the report notes.
U.S. Trusts
Subscribe to:
Posts (Atom)