Fed Rate Increase As Expected; Shrinking Balance Sheet Much More Interesting

As expected, The FOMC (Federal Open Market Committee) of the Federal Reserve raised the Fed Funds rate by 1/4-point to a range of 1% to 1.25%. They further projected that one more rate increase will be needed this year. This is all pretty much as was expected (the futures were indicating a 99%+ likelihood on a 1/4-point raise). What was much more interesting is that the Fed now plans to…

Fed leaves rates unchanged; cuts projected hikes to 2 from 4 in 2016

The Federal Reserve held interest rates steady Wednesday (3-16-16) and scaled-back its expectations for further rate hikes for 2016 and 2017. At its December meeting, the Fed projected four rate hikes in 2016, but new estimates released today reduced that number to two. Fed officials also cut their expectations for economic growth and inflation. In addition to the two rate increases this year, the Federal Open Market Committee now projects…

Fed Stays the Course, for Better of for Worse

The Fed did not change rates today, and didn’t change course in terms of their plans for raising rates over the coming quarters and years, at least in terms of the Fed statement released after their meeting today. This outcome, or lack of any change, is a bit of a double-edged sword – since they didn’t raise rates of state directly that they are concerned about financial markets (which we…

Fourth Quarter 2015 Review/2016 Preview

The fourth quarter ended on a sour note, with a 178-point drop on the final trading day of the year. The first day of trading for 2016 was far worse, with the Dow Jones Industrial Average down almost 500 points during the trading session, before rebounding to close down 267. As we enter 2016 the Federal Reserve will take center stage, as their interest rate raising actions will drive economic…

How do you avoid being the victim of a drive-by shooting? Answer: Don’t be there when the bullets fly

The Fed decision to raise rates yesterday was met with a positive reaction from investors, who drove stock prices up about 1.5 percent during yesterday’s trading session. This reaction can partially be explained by Janet Yellen’s vigorous efforts to allay fears about the reasoning for this first hike, and the pace of the coming series of hikes we should expect. She made a valid point, stating that the Fed is…

40 Days and 40 Nights – What will the Fed Do?

There are just 40 days remaining before the next Fed meeting. All eyes will be on the Fed to see if they pull the trigger on the first Fed Funds rate hike since June of 2006, and the last Fed Funds rate change since December of 2008, when the Fed placed that rate in a range between 0% and 0.25%. Stocks have rebounded significantly from the dips in August and…

stocks continue yesterday’s losses

Stocks continue to slide, with the Dow losing 250 points, and the Nasdaq Composite off more than 100 points (more than 2%) so far today. I think there has been too much emphasis on the first rate hike (I am guilty of this also). If we look at the multi-year trend for rates, the U.S. has been in low interest rate mode for 7 years. If we look globally, other…

Nasdaq Cracks 5,000; Oil at 6 1/2-year Low

Remember a few years ago when oil went to $150 per barrel? Strange that we were running out of oil then, but now, several years later, there seems to be so much oil that there is nowhere to store it. Oil stockpiles added 2.6 million barrels, pushing oil prices to fresh lows just above $40 per barrel this morning. Stocks, reacting to oil, Fed minutes, and losses in Asian and…

As Goes Apple So Goes the Market

Apple is down 3.5 percent today, and has dropped 14 percent from its recent high of about $133 in late April (it was around $132 on July 20th). Despite this decline, the Nasdaq Composite has remained relatively strong. Interestingly, the Dow Jones Industrial Average and the S&P 500 charts look much more similar to Apple’s chart, than does the chart of the Nasdaq (even though Apple is obviously a tech…

Earnings Reports from Some Top Names Foretell Chinks in the Market’s Armor

Twitter, now down about 14% so far this morning after their earnings report, is just the latest of several high profile companies reporting solid results, only to have their stock prices hammered by investors looking for any reason to sell. Apple experienced the same result last week, as did Microsoft, UPS, and others. In each case there were reasons, justified or not, for investors to react as they did. In…