Posts tagged ‘Fed announcements’

The Fed Speaks: Didn’t He Say the Same Thing Last Month?

By trader7757, 9 August, 2010, No Comment

Day trading today was like watching a nail rust. I find that amazing, too. The Fed has been saying the same thing for the last three months and there have been no substantive changes in the economy. They can’t lower rates, as the Fed Funds rate is already zero. So that rules out any earthshaking rate changes, and they can’t raise rates because the economy continues to, at best, stagger like a drunken sailor.

Just the same, the market waited with eager anticipation to hear what Mr. Bernanke would say. Imagine my astonishment when he said, well, he said the same things he has been saying for the last three months. The fed is going to continue quantitative easing (which is the latest phrase in a long list of Fed Speak anachronisms) and they may or may not buy some bonds to accomplish this goal. The Fed chairman did not see any immediate relief from the recession-like conditions we are experiencing. I am certainly glad we are out of the recession, and now just experiencing recession-like conditions. I would appreciate it if somebody would clarify the difference between a recession and recession-like conditions.

But the most interesting consequence of all this Federal Reserve nonsense is in the pall that falls over the stock market as it waits in eager anticipation for the utterances of the Fed chairman. Did they think he was going to say something new? To be sure, the Fed is nearly out of options for managing our monetary system. They can’t move interest rates because they have run out of room: they have a big gun, but no bullets.

And that’s what has me scratching my head. Why all this trepidation every time the Fed meets? They are, essentially, out of options to manage the economy and it’s not like you can count on them to spell out, in real terms, how damaged our economy has become. No, that would have people running to the bank’s like lemmings in a desperate attempt to withdraw whatever money they could get their hands on. So we listen to our Fed chairman spew nearly indecipherable musings of on the esoteric economic theories and machinations the Fed is currently employing to make everything “all better.”

So the market went sideways for a good portion of the day as we waited for the Fed chairman’s proclamations: and when the earthshaking proclamations were issued the market resumed its normal activity. And you know what is really crazy? We will do the same thing next time the Fed meets. Even worse, nothing will be changed and we will ask ourselves, “didn’t he say that last month?”

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Some Random Thoughts for Week Starting August 9, 2010

By trader7757, 8 August, 2010, No Comment

We ought to have an interesting week as the market continues to worry about the economy, despite robust earnings from a number of major corporations. Walt Disney, Cisco, and J. C. Penney will all be reporting earnings this week.

Of course, the real center of attention will be on the Fed meeting this week. Investors will be paying close attention to what the Fed has to say, which is amusing to me because they have been saying the exact same thing for quite some time now and are not expected to change the tenor of their ongoing advice. Just the same, countless investors will be glued to their television sets as the usual suspects spew nearly identical blather of Fed Speak for the masses to decipher for some hidden meaning.

In short, you can count on the interest rates remaining the same, with the chairman explaining he expects rates to stay the same until the end of the year. The Fed will be also engaging in quantitative easing, which has become the Fed Speak term for the past year. Translated, it means they want more money in the economy so people will buy stuff and banks will make loans. Unfortunately, banks have been reluctant to participate in the quantitative easing program as they are more concerned with profit margins than ever.

The futures markets have been interesting of late, and there has been interesting moves nearly every day of the past week. I have to admit that predicting the market moves as become a nearly impossible task as traders seem skittish and prone to react to the smallest of reports or rumors. All in all, it makes for some very interesting trading, though you need to be careful not to over commit to any position.

Hewlett-Packard ought to dominate the news tomorrow as their recently departed CEO resigned over several allegations, including a little hanky-panky he is one should not have been involved in. There have been a number of articles on the business pages outlining which direction Hewlett-Packard will take in the coming years regarding its business model. Most of this blather is just that, blather.

Of course, there has been plenty of talk about the employment reports, or more aptly, the unemployment reports. Corporations have been unwilling to add personnel as they fret over the future of the US economy and consumer spending. Most economists don’t expect the employment picture to improve in the near term. This leaves the Fed in a bit of quandary, as it is necessary for employment to improve in the economy move out of near recession levels.

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ES Emini Day Trading: Pivot-Fed Announcements-Commentary

By trader7757, 16 December, 2009, No Comment

Tomorrow should be an interesting day, as I am sure the market will be keeping an eye on the jobless numbers. Along with the others indicators to be announced, especially if we get some mixed signals, the day might turn out a bit choppy.

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