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Entries in Federal Reserve (106)

Thursday
Sep082011

Fed’s Ben Bernanke Still Mum About Stimulus

Alex Wong/Getty Images(MINNEAPOLIS) -- Federal Reserve Chairman Ben Bernanke delivered his usual Sphinx-like remarks to the Economic Club of Minnesota on Thursday, revealing little detail on how the central bank could stimulate the U.S. economy.

The chairman said the Fed was “prepared to employ” stimulus at the next meeting of the Federal Open Market Committee (FOMC) Sept. 20 to 21.  But he did not say what he would do.

He also described what economists have been saying for months: the country has weak consumer demand, while the business sector is stronger.

“Bernanke issued his second consecutive awaited speech in which he more or less said nothing,” said Guy LeBas, Janney Capital Markets’ chief fixed income strategist.

LeBas said he expected the Federal Reserve chairman to be restrained in his policy implications. The Fed chair didn’t allude to the recent reported disagreement among the Federal Reserve Board of Governors about how to respond to the weak economy.

“The Committee also continues to anticipate that inflation will moderate over time, to a rate at or below the two percent or a bit less that most FOMC participants consider to be consistent with the Committee’s dual mandate to promote maximum employment and price stability,” Bernanke said.

Copyright 2011 ABC News Radio

Thursday
Sep082011

US Stock Futures Up as Investors Await Obama's Jobs Speech

Comstock/Thinkstock(NEW YORK) -- After breaking its losing streak the day before, Wall Street appears to be headed for more gains with stock futures edging higher ahead of Thursday's opening bell.

However, that positive trend could easily change as investors await speeches by President Obama and Federal Reserve Chairman Ben Bernanke.  Bernanke is scheduled to speak on the economy Thursday afternoon -- midway through the stock market's trading session -- while Obama is set to unveil his long-awaited jobs plan later in the evening after Wall Street has closed.

The latest weekly report on jobless claims may also have an effect on stocks.  The Labor Department will release that data Thursday at 8:30 a.m. ET.

On Wednesday, the Dow Jones Industrial Average added 276 points after closing lower in the previous three trading sessions.  The Nasdaq and S&P 500 also ended the day higher, adding 75 points and 33 points, respectively.

Overseas, European markets are trading higher Thursday, while Asian markets closed mixed.

South Korea’s Kospi rose 0.72 percent, Japan's Nikkei index climbed 0.34 percent, Taiwan’s Taiex added 0.26 percent, and Australia’s S&P/ASX 200 gained 0.11 percent.  China’s Shanghai Composite and Hong Kong’s Hang Seng, on the other hand, closed lower, falling 0.68 percent and 0.67 percent, respectively.

Copyright 2011 ABC News Radio

Tuesday
Aug302011

Central Bank Talks Send Stocks Higher

Comstock Images/Thinkstock(NEW YORK) -- When Ben Bernanke and his team speak, the markets listen -- and they did Tuesday.  Stocks inched higher Tuesday amid talk of possible bond purchases by the Federal Reserve.
 
The Dow closed up 21 points, the Nasdaq gained 14 and the S&P added three for the session.
 
While the Federal Reserve mulled over several options -- one being the purchase of Treasury bonds -- to help strengthen the economy at its latest meeting Aug. 9, officials at the Central Bank settled on keeping interest rates low until 2013, according to minutes from the meeting released Tuesday.
 
Meanwhile, consumer confidence is down -- big time. The Conference Board's index slipped 15 points this month to its lowest level since April of 2009. That could weigh heavily on the August jobs report, which is due out on Friday.
 
Copyright 2011 ABC News Radio

Friday
Aug262011

Bernanke Speech Moves Markets: No New Stimulus

Daniel Acker/Bloomberg via Getty Images(WASHINGTON) -- Fed Chairman Ben Bernanke, in a much-anticipated speech Friday, announced no new or additional steps the Fed would take to help the ailing U.S. economy. Instead, he expressed optimism the economy could continue to recover, based on its own internal strength and from past assistance given by the central bank.

Bernanke reiterated the Fed's determination to keep the federal funds rate "exceptionally low" through mid-2013 at least. He did not, however, say what many traders had been hoping to hear: That the Fed would embark on a further round of quantitative easing -- a so-called QE3.

Markets were underwhelmed by his remarks. The Dow fell slightly, then rose 67 points to 11,218 at 11:20 a.m.; 10-year treasuries fell 2.15 percent; gold rose 1.64 percent.

The chairman said he remained strongly optimistic for the U.S. economy's long-term health, and that he expected inflation to remain at or below 2 percent. He also acknowledged, however, that the recent downgrade of the nation's credit rating had undermined both "household and business confidence."

He implied that there was only so much more the Fed could do to stimulate the economy, and that it was time now for Congress and the White House to create "policies that support robust economic growth in the long term," to reform the nation's tax structure and to control spending.

He said that the Fed would continue to review, as circumstances might demand, the full "range of tools" at its disposal to "provide additional monetary stimulus."

Copyright 2011 ABC News Radio

Friday
Aug262011

Global Markets Drop in Anticipation of Bernanke's Speech

Comstock/Thinkstock(NEW YORK) -- U.S. stock futures are slightly higher ahead of Friday's opening bell as investors await what Federal Reserve Chairman Ben Bernanke has to say on the nation's stumbling and stagnant economy.

Although no big announcement is expected, Bernanke could hint at possible steps the Fed may take to help the country avoid falling into a second recession.  He will deliver his speech Friday morning at a financial meeting in Jackson Hole, Wyoming.

Anticipating Bernanke's speech, global markets are mostly down Friday.  European markets are trading lower and several Asian markets ended the day with deficits.

Hong Kong’s Hang Seng fell 0.86 percent, Australia’s S&P/ASX 200 dropped 0.3 percent, and China’s Shanghai Composite shed 0.12 percent.

South Korea’s Kospi, however, closed the day higher, adding 0.81 percent.  Japan's Nikkei index and Taiwan’s Taiex also saw gains, rising 0.29 percent and 0.5 percent, respectively.

Copyright 2011 ABC News Radio

Thursday
Aug252011

Bernanke to Speak Friday; What's Left in Fed's Toolbox?

Alex Wong/Getty Images(WASHINGTON) -- Federal Reserve Chairman Ben Bernanke goes before the microphones on Friday to announce what, if anything, the Fed will do next to buck up the stumbling and stagnant U.S. economy.

Critics question whether the Fed has anything left in its toolbox it hasn't already tried, a mirror of critics' thoughts on President Obama's inability to turn the economy around. Syndicated columnist Charles Krauthammer summed up Obama's prospects earlier this month: "He's out of bullets. He's out of arrows."

As far as the Fed goes, the world's stock markets seem to believe otherwise.  They rose this week, in part on anticipation that the Fed will take new steps to keep the U.S. from sinking further into recession.

Truth is, there's plenty the Fed still could do.  A number of unused tools remain, but none is without controversy.  Some, politically, are too hot to touch.  And still, others are so potent that their use cannot be imagined, short of some doomsday scenario.

It was just one year ago that Bernanke announced a second round of so-called "quantitative easing," dubbed QE2.  As with its predecessor, QE1, announced in March 2009, the idea was for the Fed to buy private debt on a massive scale, thus keeping interest rates low and invigorating the U.S. economy with a booster of inexpensive cash.  The stock markets of the world have benefitted, and traders this week were cheered at the prospect that Bernanke, on Friday, will announce QE3 or something like it.

It's far from sure, however, that Bernanke will choose that tool.

The effectiveness of the first two QEs has been questioned.  Critics acknowledge that easing has brought temporary benefits, but they argue those have accrued primarily to the stock market.  They question whether flooding the markets with yet more cheap money is a good thing for the economy long-term.

Lance Roberts, chief strategist for Streettalk Advisors, calls quantitative easing just so much "heroin."  The first two shots of it, he says, indeed invigorated markets.  But the effect was short-lived.  Another round of it might help the U.S. "temporarily avoid a double dip," but it would not solve "our long-term fiscal problems."

It's not only Fed outsiders such as Roberts who reject QE3. Some Fed insiders oppose it.  In a rare instance of internal dissent, three regional Fed presidents (Dallas, Philadelphia and Minneapolis) earlier this month voted against Bernanke's decision to keep interest rates low through 2013.  President Richard Fisher of Dallas said in a speech that the U.S. economy already is "awash with liquidity."

So, if not QE3, then, what?

"That's the $64 million question!" says Roberts.  We could see, he speculates, "massive loan-forgiveness.  But there would have to be federal support to keep the banks solvent."  And such a move, he notes, would only encourage the non-forgiven to walk away from their debts.

"Bernanke has very little other choice at this point.  All the Fed has available to it is the power to continue to suppress interest rates," Roberts says.

Copyright 2011 ABC News Radio

Monday
Aug152011

Rick Perry: ‘Almost Treasonous’ for Feds to Print More Money Pre-Election

Justin Sullivan/Getty Images(CEDAR RAPIDS, Iowa) -- Texas Gov. Rick Perry capped off his first full day of campaigning in Iowa Monday by suggesting that if the Federal Reserve prints more money between now and November 2012 it would be akin to an act of treason.

“If this guy prints more money between now and the election,” Perry said, “I don’t know what y’all would do to him in Iowa, but we -- we would treat him pretty ugly down in Texas. Printing more money to play politics at this particular time in American history is almost treacherous -- or treasonous in my opinion.”

He added, “We’ve already tried this. All it’s going to be doing is devaluing the dollar in your pocket and we cannot afford that. We have to learn the lessons of the past three years that they’ve been devastating. The President of the United States has conducted an experiment on the American economy for almost the last three years, and it has gone tragically wrong and we need to send him a clear message in November of 2012 that new leadership is coming.”

Perry, who officially entered the presidential race on Saturday, was responding to a question from a member of the audience at a backyard county Republican Party fundraiser who asked him what he would do with the Federal Reserve.

Perry initially said, “I’ll take a pass on the Federal Reserve right at the moment to be real honest with you,” before launching into his more pointed answer.

When asked in a follow-up interview whether Perry thought that the Federal Reserve was playing politics to try to help President Obama, he replied, “If they print more money between now and this election, I would suggest that’s exactly what’s going on.”

Copyright 2011 ABC News Radio

Wednesday
Aug102011

Wall Street Report: Wild Ride for Global Financial Markets Continues

Comstock Images/Thinkstock(NEW YORK) -- Overseas stock markets rebounded Wednesday on the heels of Wall Street's surge Tuesday, which put the Dow Jones Industrial Average back above the 11,000 mark.

Japan's Nikkei index rose 1.1 percent, while Hong Kong’s Hang Seng went up 2.3 percent and South Korea's Kospi jumped by 0.3 percent.  Australia's S&P/ASX 200 and New Zealand's NZX-50 also saw gains, climbing 2.6 percent and close to three percent, respectively.

This latest upswing comes after the U.S. stock market recovered from the Dow dipping 634 points on Monday, marking the biggest point loss in a single day since Dec. 1, 2008.

On Tuesday, the Dow shot up 430 points to 11,240 after the Federal Reserve pledged to keep interest rates at their historic low at least through mid-2013.  The S&P also closed up 53 points, while the Nasdaq added 125 points.

U.S. stock futures are down going into Wednesday's opening.

Meanwhile, oil prices are on the rise again.  Crude is now approaching $82 a barrel.

And in other business news, the government will be releasing several reports on Wednesday.  The Commerce Department is set to unveil its numbers for wholesale trade in June, the Labor Department will release its reports on job openings and turnover, and the Treasury Department is expected to come out with its federal budget statement for last month.

Copyright 2011 ABC News Radio

Tuesday
Aug092011

Wall Street Report: Fed Extends Record Low Interest Rates, US Stocks Rebound

Adam Gault/Thinkstock(NEW YORK) -- The Federal Reserve Board announced Tuesday afternoon it would keep interest rates at their historic low at least through mid-2013 -- a sign of how serious the Fed is about countering a slowing economy.

Stocks earlier rebounded strongly from Monday's record drop, as buyers sought bargains. The Dow Jones Industrial Average stood at 10,943 by mid-afternoon, up 133 points after gyrating on the Fed's announcement. Gainers included Bank of America and Alcoa.

The Federal Reserve said it will be keeping a key Federal interest rate low because economic growth this year has been "considerably slower than the Committee had expected."

That move confirms what most Americans are feeling: things simply aren't getting better when it comes to the overall economy. And it's historic: never before has the Fed given a specific timeframe for keeping rates low, in the past favoring the vague "extended period" that the markets interpreted as meaning a couple more months.

Bernanke and Co. downgraded their assessment of the economy, noting the increasingly dire jobs situation, slowing consumer spending and the sagging housing market.

"The Committee now expects a somewhat slower pace of recovery over coming quarters than it did at the time of the previous meeting, and anticipates that the unemployment rate will decline only gradually toward levels that the Committee judges to be consistent with its dual mandate," says the post-meeting statement. "Moreover, downside risks to the economic outlook have increased."

While they put a two-year time horizon on the 0-0.25 percent interest rates, they did not announce an expansion of their quantitative easing programs, which were meant to stimulate the economy even further. They suggested they'd keep the $2 trillion currently deployed in the programs "reinvested" instead of allowing them to slowly expire over time as the investments got paid back. The program might be expanded if the economy warrants it.

Three members -- all regional Fed presidents serving as voting members for a limited term -- dissented, saying they'd like to have maintained the "extended period" language.

Copyright 2011 ABC News Radio

Thursday
Jul282011

Fed's 'Beige Book' Report Finds Slow Economic Growth Across US

Comstock Images/Thinkstock(WASHINGTON) -- With a government default looming as lawmakers struggle to strike a deal to lift the nation's $14.3 trillion limit, Americans faced even more negative news about the economy on Wednesday.

The Federal Reserve said in its latest "beige book" report on the financial state of the central bank's 12 districts that two-thirds of these areas experienced slower economic recovery during June and the early part of July.

This follows a pattern since the start of the year when things began looking up due to increased holiday sales in December and companies starting to hire.  However, higher fuel costs, the natural disasters in Japan and unease throughout Europe and the Middle East grounded the modest recovery to a halt.

And yet, there was actually some good news in most of the regional districts watched by the Fed.

According to the "beige book," inflation pressure has eased throughout most of the U.S. and a drop in gasoline prices has meant that consumers are spending more in stores.

There was also a slight growth in hiring although the housing market, which triggered the recession in November 2007, remains weak.

Copyright 2011 ABC News Radio

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