The Federal Reserve has a dual mandate: maximum employment ( between 5.2% and 6% unemployment ) and price stability (currently, inflation at 2% or less). After last Wednesday’s decision on ‘the taper’ I think they should take a page from the medical profession and add a third mandate, “do no harm.” I believe the Fed’s…
Session 59– What the #%&*, No Taper!!!
One thing you learn, or should learn after being around the market as long as I have, is that “the crowd” is generally always wrong. I was with “the crowd” today. I expected the Fed to begin tapering of its Quantitative Easing Program. Boy was I (and ‘the crowd’) wrong. On the short-term, the market…
Session 58–Pass The Xanax, Please!
This week of September 15, 2013, has set up to be one full of angst. We have a Fed Open Market Committee meeting Tuesday and Wednesday culminating with a pronouncement on the “Dreaded Taper.” Although the old saw about “September, The Cruelest Month,” seems to be heading for the same fate as “Sell in May…
Session 57— “Lipstick On a Pig”
“Lipstick on a pig” is probably one of the more disgusting phrases that has made it into common usage. Leave it to one of the most off-putting, obnoxious individuals in financial television, Rick Santelli, to give us a quintessential example of this tasteless descriptor of putting a smiley face on a bad situation. To set…
Session 55–“You Call This a Crisis?”
NASDAQ’s short ‘downtime’ last week (thanks to a technical glitch) sparked a storm of lamentations and consternation in the cable financial media. They called it a crisis. You would have thought it was the end of the world or, at least, another nail in the coffin of investor confidence. I bet poor Warren Buffett was…
Session 54–Taper: “Just Do It!”
I wasn’t sure of the value of QE3 when it was introduced in September of 2012. In retrospect, the low-water mark for the yield on the ten-year treasury occurred in July, 2012, at 1.404%. Rates were already low and did not go any lower even as QE3 was introduced. Besides providing a slight overbid to…
Session 53–Hyper-Low Interest Rates: Was It QE Or Just Plain Fear?
There is a very strong consensus on Wall Street and in the media that our long run of super-low interest rates is the singular result of the Federal Reserve, Ben Bernanke and Quantitative Easing. As an example, Barron’s takes the Fed and Ben Bernanke to task again this week in a piece called “Ben’s Ultimate…
Session 52–A Twofer “The Dreaded Taper” Part II and The Media Gets It Right Again!
If there is one thing that seems certain, Fed tapering of QE is coming and it is now media obsession number one. This will continue until it becomes fact (a fact that the market probably has already priced in). The Fed could probably end quantitative easing “cold turkey” without a whimper from the market, provided…
Session 51–Stunning Revelations From Mutual Fund Land!
Since the market began its precipitous decline in 2008 and until January of this year, $418 billion came out of equity mutual funds. According to Lipper Analytics, January of 2013 broke this streak of net redemptions with a $14 billion net inflow. At the same time Lipper reported net new bond fund purchases were $34…
Session 50–The Beginning of The End Or The End of The Beginning?
My title today pays homage to one of the most esteemed and controversial figures of the twentieth century, Sir Winston Churchill, and a speech he gave celebrating the October 1942, British victory over Erwin Rommel’s Afrika Korps at El Alamein. In putting the event into perspective Churchill said, “This battle was not the end. It…