Author: Michael D

Guesstimates on the outcome of the Fed meeting were all over the map with most thinking that a quarter-point reduction was in the cards.  However, the Fed shocked the market by cutting interest rates 50 and 50.  The federal funds rate (overnight loans between banks) and discount rate (direct loan to banks from Fed) were both lowered 50 basis points to 4.75% and 5.25% respectively.  Stocks rallied as concerns over the housing and credit turmoil dragging down the economy diminished.  For the week, the DOW, S&P 500 and NASDAQ were up 2.8%, 2.8% and 2.7% respectively. 

As stocks rallied, the dollar tanked. The Fed was stuck between a rock and a hard place.  Lower rates and tank the dollar.  Do nothing and possibly tank the economy.  The economy won.  So, what are the implications of a lower dollar?  Take a trip to Europe or Canada for that matter and you will find out.  It takes more dollars to buy stuff abroad than it did last week.  However, on the flip side tourism will pick up as visiting the US hasn’t been this affordable in years.

Continue reading “Time & Money Review 9/21/07 – Commodities Explode”

The September 18th Fed meeting has been hyped more than the Super Bowl.
Is subprime slime leading the economy into a recession?  Can Bernanke and crew save the day with a rate cut?  0, 25 or 50 basis points?  This is definitely shaping up to be a sell the news type event.  I am beginning to prepare myself mentally for a 250 point down day.  The clear winner on Tuesday will be CNBC.   Their ratings will be off the charts around 2PM.

As the talking heads went on ad nauseam about the Fed meeting, the market marched higher.  For the week, the DOW, S&P 500 and NASDAQ were up 2.5%, 2.1% and 1.4% respectively.  The semiconductors were AWOL losing 1.4% for the week. They were weak all week and bit the dust on an Intel downgrade on Friday.

Continue reading “Week in Review 9/14/07 – 0, 25 or 50 basis points?”

All week CNBC hyped Friday’s job numbers as the most important economic report of the year.  A weak number (~50K) would provide the ammunition for Fed Chairman Ben Bernanke to appease the market and cut interest rates.  A strong number (~120K) and he would continue singing his economy is fine tune. 

No one expected a negative print.  The non-farm payrolls showed a decline of 4000 jobs.  This was the first time the economy shed jobs since August 2003.  The market fell through the floor as the conversation moved from managing a financial crisis to concerns of a recession. 

Continue reading “Week in Review 9/7/07 – Jobs Fall Through the Floor”

If you were fully invested on July 31st and simply buried your head in the sand for the month August – the market rewarded you with a 1% return on your money.  Not bad for being oblivious to the turmoil that has been roiling the market since it peaked on July 19th.  The rest of us have been whipsawed like it is no tomorrow.  One hundred point down days on the DOW seem like moral victories.  That certainly beats the two and three hundred point down days that have become so common.

We were treated to another 280 point drubbing day on Tuesday.  The breaking news was consumer confidence dropped to its lowest reading in a year and housing prices showed its worse decline in 20 years.  However, before we could kick ourselves too hard – a letter on Wednesday from Federal Reserve Chairman Ben Bernanke stated  the Fed was “prepared to act as needed” to ensure credit market troubles would not adversely affect the economy.  That was good for +247 points on the DOW.  Are you getting sea sick yet?

Continue reading “Week in Review 8/31/07 – Believe It Or Not Market Up 1% in August”