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Fed Day Part Two

greenspan2

      by Larry Levin   When I was reading up on yesterday’s FOMC announcement, I came across a speech from a previous Fed Chairman, Alan Greenspan, that was quite interesting. I didn't have enough room to include it in the missive, so today we'll talk about it. If you didn't know, prior to being the Fed Chairman, Alan Greenspan was a believer in holding gold as a store of wealth. He thought that that was wise because governments, since the beginning of time, had ALWAYS destroyed the purchasing power of any fiat currency … [Read more...]

Fed Day

fomc

      by Larry Levin   The FOMC 2-day meeting ended Wednesday and its afternoon statement didn't contain many surprises. QE3 is over, but ZIRP remains. Some headlines follow... *FED ENDS THIRD ROUND OF QUANTITATIVE EASING AS PLANNED *FED SEES 'SOLID JOB GAINS' WITH LOWER UNEMPLOYMENT *FED REPEATS RATES TO STAY LOW FOR 'CONSIDERABLE TIME' And a small portion of the statement follows... The Committee judges that there has been a substantial improvement in the outlook for the labor market since the inception of its current asset purchase program. … [Read more...]

Facebook

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      by Larry Levin   As we wait for the other "F" behemoth to make their announcement, I want to focus on Facebook. The social media giant reported better than expected Q3 revenue and earnings per share Tuesday, although its stock price fell in after hours trading last night as the company spooked investors with its 2015 outlook — a year described as a major “investment” year for the world’s largest social network. Revenue generated from advertising came in at $2.96 billion, up 64 percent from a year ago, with about 66 percent coming from mobile … [Read more...]

Meeting Time

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      by Larry Levin   It’s meeting time. Will the Fed be serving coffee and donuts at their two-day gathering? More likely charcoal grilled dove as the Fed isn’t really like to end six years of QE with an abrupt rate hike. Because it kind of, sort of “works”, just ask the departed grill master, Ben Bernanke, who pompously claimed that “Quantitative Easing works in practice, but it doesn’t work in theory.” You have to love the recipe looks nice in the cookbooks, but don’t try to actually make it logic. And does QE even really look good when … [Read more...]

Grades

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      by Larry Levin   It’s all a matter of perspective. Sometimes it’s a victory for the F student to get a D. Take the European banks. Prior to their financial stress tests, the consensus was that they would all fail miserably. As it turns out, only one in five of the euro zone’s top lenders failed the health tests at the end of last year, and most of them have repaired their finances since then. It was a consensus better grade than expected, as the ECB found their problem students to be contained in the Southern classrooms of Italy, Cyprus and … [Read more...]

Central Planning

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      by Larry Levin   A pathetic defense of central-planning, excuse me – central banking – was offered by the central-planning banker in chief of the USSA a few days ago: Janet Yellen. In her speech about “Rising Inequality” Janet spewed the following truth, but of course offered no true reason as to why it is happening - “The extent of and continuing increase in inequality in the United States greatly concerns me. … It is no secret that the past few decades of widening inequality can be summed up as significant income and wealth gains for … [Read more...]

Messed Up

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      by Larry Levin   With another massive up day in the markets on Tuesday on dismally low volume, it is officially back to the baffling and the bizarre. Whatever the incumbent politicians will tell you in their stump speeches as we approach the mid-term elections, the "economic recovery" that we keep hearing about is less than stellar. Not that the politicians running against the incumbents seem to be offering any solutions. But the facts speak for themselves. Here are 19 truths about the state off the US Economy from the Economic Collapse … [Read more...]

Sticksave

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      by Larry Levin   Well things are back to “normal” for the time being. Earnings disappointments, check. Bad economic news, check. Market rebound, check. Another Central Bank sticksave, check. Yesterday it was IBM, today it is the other consumer-spending bellwether, Coke, to disappoint on earnings. But Coke didn’t just miss, it missed big, reporting $11.98 billion in sales, well below the estimated $12.12 billion. In addition, they had warnings about the future, guiding "below its long-term EPS growth target for 2014." Of course the shakiness … [Read more...]

Bonds

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      by Larry Levin   Equities were not the only market that experienced high volatility last week; the bond market did as well. At one point, the 10-YR Note shocked the market by violently trading below the 2% water mark. I believe that a great deal of that volatility was due to the sell-off in stocks, which was due to the ending of QE3 Treasury purchases, which may have sparked a short-covering rally due to one very short and very large fund. A short-covering rally in bonds forces the price higher but the yields lower, which created the sub 2% trade, … [Read more...]

QE 4

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      by Larry Levin   If you have been paying attention to the real reason why the Federal Reserve conducted QE2, Operation Twist, QE3, etc it is not to help the jobless, or to lift inflation, or for the general economy. No, it is now and has always been to boost the stock market. I know that this isn't part of the Fed's mandate, but why would that matter to a group of secret bankers? Just two days ago, when the market (ES) was trading at a shockingly low level of 1875.00, word came from on-high that a Fed member mentioned a possible QE4 action. Could it … [Read more...]