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Tag Archives: Greenspan

August 2006 Issue

In this month’s visit, I’ll show you how to reserve your seat for the ride up. Surprisingly, perhaps, some of tomorrow’s biggest winners
are likely to be stocks that most investors have heard of—but don’t happen to own. I’ll point you to three, in particular, that should
comfortably double your wealth over the next three to five years.

The Fed Plays with Fire

Comments from three regional Federal Reserve presidents touched off a selling squall on Wall Street today. (The Dow fell 94 points, and the blue chip S&P 500 sustained an even bigger percentage loss.) It’s a sign that the stock market is becoming more and more worried that the central bank may tighten credit too far.

No Surprise Here

A fascinating, eccentric critter this stock market is. Today, prices dropped sharply after the Federal Reserve voted to raise overnight interest rates another quarter-point (to 3.75% on the key federal funds rate). Yet the Fed’s move should have come as absolutely no surprise.

What Next for Rates?

A week from now, we’ll know a bit more — when the Federal Reserve meets and decides whether, out of respect for the victims of Hurricane Katrina, to take a break from its credit-tightening campaign. At this stage, I’m still expecting Greenspan & Co. to boost money market rates by another quarter-point (to 3.75% on federal funds). But it’s a close call.

Out of Luck

Wall Street’s lucky streak may finally be coming to an end. For the past couple of weeks, “surprisingly” strong earnings reports have allowed the market to drift higher, despite record oil prices, China’s revaluation of the yuan (potentially a major long-term negative for the dollar) and a jump in bond yields.

May 27, 2005

We’ll take it! Stock prices climbed further this week in the run-up to the Memorial Day break. Technology stocks, in particular, continued to outperform the overall market�always a good sign, because it suggests that investors are feeling more comfortable with the economic outlook.

Correction? No Problem

My conviction is growing that the stock market has some “unfinished business” to wrap up — on the downside. Today’s sharp drop in all the major indexes shows that profit takers don’t need much of an excuse right now to swoop in. Some gurus are blaming the tumble on Alan Greenspan’s testimony before Congress. But that’s pure rationalization.

Risky Business at the Fed

It’s all but a foregone conclusion that the Federal Reserve will lift short-term interest rates tomorrow. The interbank lending rate (fed funds) will tick up to 2.5%, the sixth quarter-point increase in a row since last June. Tea-leaf readers will try to parse Greenspan’s language in tomorrow’s release, but they miss the point.

Step Up For Safety

I haven’t talked much about step-up bonds lately. But it’s time to dust off the topic. Earlier this week, the Federal Reserve released minutes of its December policy meeting. Reading between the lines, it’s clear to me that several members of the Open Market Committee would like to quicken the pace of interest-rate hikes.

Narrow but Clear

Last night’s election results have sent the message the stock market wanted to hear. President Bush has won a second term by a narrow, but clear margin. The GOP has held on to both houses of Congress, and looks to have increased its lead significantly in the Senate. What does it mean for investors?