The Fed raised rates, yields went up, stocks went down and the dollar went up. Things seemed to move around quite quickly in reaction. There will plenty of more intelligent commentary than I could ever muster so I will just say that the stock market will tell you what it thinks of Ben's statement.
This is not a ten minute concept but maybe a day or two. If stocks keep selling off that will matter as far as a vote, or not, for Ben. The S&P took back a couple points off of its post announcement low. For what it is worth I don't think this will be awful for stocks but we'll see.
One other note, so how excited are you about Michael Eisner's TV show? CNBC is expecting well over a dozen viewers to tune in.
Wikinvest Wire
7 comments:
Eisner is one of those guys I'd like to see buy a tropical island and go there. He annoys me more than myself.
Ben did what I expected. Bought puts on the XHB and QQQQ, calls/leaps on gold stocks and some energy earlier this month.
Look for a local minimum on the VIX as a sign of a major reversal. We may be on the other end of the see-saw from the fat guy.
:" NEW YORK (AFX) -- The dollar rallied across the board Tuesday after the Federal Reserve delivered on a widely expected interest-rate increase and
signaled more hikes to come.
The Federal Open Market Committee raised its overnight lending rate by a quarter of a percentage point to 4.75%. "Some further policy firming may be needed to keep the risks to the attainment of both sustainable economic growth and price stability roughly in
balance," the Fed said, repeating language from the January statement, which
predated the Alan Greenspan-to-Ben Bernanke changeover at the bank."
Imagine that someone has a slingshot directed at your forehead, and that the payload is a gold goin. The strength of the dollar is the tension in the springs, Ben has ahold of it, and a Chinese diplomat sneeked up behind him with a big firecracker. Hehe.
with that kind of imagery I would ask why you don't start a blog?
Roger, instead of an e-mail, I wanted to send you link to:
http://www.rgemonitor.com/blog/setser/122416
as soon as I saw it, I thought of you.
From what I read here every day, most if not all of you guys know far more than I do about this business, so I have a question: with interest rates going up in the USA and bond yields rising as a consequence, is'nt it time to start thinking about buying these to make a little when the rates come down again?
Pierre
to Pierre,
It depends. The way the question is phrased I would ask if capital gains would be the priority for buying the bonds. That is a tough game to play.
Rates are higher than they have been in a while, yes. But will the deficits and other factors send them higher? Keep in mind rates have moved up a lot but are still slightly below historical norms at the front end and way below the norm further out.
There may be more interest rates increases from Bernanke on the way.
A review of Bernanke's research papers suggests he is keen on what is called an “Aggressive Inflation Targeting” policy framework that differs from “Accommodating” approach in the strength of response to the anticipated inflation by a factor of two - that’s significant!
Saving you the maths, in practice it means that should Bernanke apply the aggressive inflation targeting policy the interest rates would move more aggressively in both directions. So the Fed may not be finished with the interest rates increases just yet.
George Bijak, www.businesscycleinvestor.com
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