Fed

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The verdict on the U.S. Federal Reserve’s quantitative easing program, including part 2, or QE2, will not be rendered for years. It may be longer, given the many areas of financial and economic policy the program has touched.

Anyone who says they definitively and incontrovertibly know QE2′s long-term impact is not being genuine: many more data points have to occur to judge, for example, how QE2 affected banker lending psychology, let alone its impact on the U.S. economy.

That said, we can glean clues and insights by looking at current conditions, and one short-term data point reveals that since Fed Chairman Ben Bernanke disclosed the implementation of QE2 on August 27, the S&P 500 is up 17%, Bloomberg News reported Friday.

Continue reading A Bernanke Rally? S&P 500 Up 17% Since QE2 Announced

A Bernanke Rally? S&P 500 Up 17% Since QE2 Announced originally appeared on BloggingStocks on Fri, 17 Dec 2010 16:40:00 EST. Please see our terms for use of feeds.

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The Federal Reserve Open Market Committee stated, again, that interest rates will remain low for an extended period of time and that quantitative easing will continue with the “purchase $600 billion of longer-term Treasury securities by the end of the second quarter of 2011, a pace of about $75 billion per month.” Thomas Hoenig again voted against the FOMC policy.

The FOMC left its options open for the future and gave no specific guidance as to what actions it will take when QE2 ends next year.

Continue reading The Fed Statement: No News, Just Confirmation of Policy

The Fed Statement: No News, Just Confirmation of Policy originally appeared on BloggingStocks on Wed, 15 Dec 2010 09:50:00 EST. Please see our terms for use of feeds.

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The news is out, the Federal Reserve decided to leave its key interest rate and the size of its bond purchase program unchanged. This move should surprise very few, with the tepid reaction from investors serving as evidence. The Fed funds rate remains in its all-time low range of 0 to 0.25%, its perch since December 2008. The move was not unanimous, as Thomas Hoenig, President of the Kansas City Fed, dissented with a warning that a large stimulus could lead to inflationary expectations that could in turn choke off any economic recovery.

Continue reading Fed Holds Rates Steady, Surprises No One

Fed Holds Rates Steady, Surprises No One originally appeared on BloggingStocks on Tue, 14 Dec 2010 17:20:00 EST. Please see our terms for use of feeds.

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To say that the financial crisis era has been riddled with half-truths, distortions, and outright falsehoods regarding the unprecedented public policies designed to maintain stable, liquid credit markets and help stimulate the U.S. economy, would be an understatement. Moreover, investors need to disabuse themselves of them if they hope to make informed, balanced, and prudent investment decisions.

One such misnomer concerns the categorization of quantitative easing.

As U.S. Federal Reserve Chairman Ben Bernanke took pains to clarify Sunday, during his CBS ’60 Minutes’ interview, the Fed is most certainly not ‘printing money.’

A monetary policy of printing money would involve adding money to the financial system that chases the same amount of goods. That can and typically does lead to higher inflation.

Continue reading Fed’s QE2 is a Bridge to Normal Credit Markets

Fed’s QE2 is a Bridge to Normal Credit Markets originally appeared on BloggingStocks on Tue, 07 Dec 2010 16:00:00 EST. Please see our terms for use of feeds.

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