Tag Archives: Federal Reserve

3things You Need to Know Today

By Andrew Busch | Published: January 18, 2011

1. China’s President Hu Jintao visits the United States. This is an official state visit and there will be an official state dinner as President Hu comes to Washington D.C. and then travels to Chicago. Yesterday, he answered submitted written questions from both the WSJ and WaPo. WSJ question 4: What do you think will be the U.S. dollar’s future role in the world? How do you see the issue of making the RMB an international currency? Some think that RMB appreciation may curb China’s inflation, what’s your view on that?

Here are the salient bullets on the currency:
• … …READ MORE

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Fed to stay course, Markets to correct course.

By Andrew Busch | Published: January 7, 2011

Today at 9:30AM ET, Federal Reserve Chairman Ben Bernanke makes his way to Capitol Hill to appear before the Senate Budget Committee for their first meeting of the 112th Congress. He will be testifying on the U.S. Economic Outlook: challenges for monetary and fiscal policy.

We can expect numerous questions on today’s employment data as well as the looming debt ceiling hike. Democratic senators will likely focus on the fall in the unemployment rate and will be generally supportive the Fed’s actions.

However, there’s a new Congress in town and this group will likely not be as obsequent. Look for … …READ MORE

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China is the future of the US

By Andrew Busch | Published: November 18, 2010

China is the future of the US

After the less than satisfying G20 meetings, the latest newsflow out of China is centered on what to do about inflation and how to counteract QE2. To wit:

• People’s Bank of China’s Prof Wang said, “The growth of prices has accelerated since September mainly because of intensive hot money inflows because of yuan appreciation and new quantitative easing measures by the U.S….It’s an urgent job for the central bank to tighten up liquidity and it needs new policy tools to do so.” Shanghai Securities News.
• China Investment Corporation’s Hong Kong chairman … …READ MORE

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NFIB Small Gains

By Andrew Busch | Published: November 9, 2010

The Small Business Optimism Index rose 2.7 pts to 91.7 in October and indicated that small biz is more upbeat about the future. According to Dow Jones, “Owners expect an improvement in demand, with the expected sales index up 4 percentage points to 1%. The subindex of expected business conditions in six months also turned positive, jumping 11 percentage points to 8%. And the subindex on earnings trends continued to improve, rising 7 points to -26%. Hiring also made gains. The October employment subindex increased 4 points to 1%. For those firms that are hiring, the subindex covering job openings … …READ MORE

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Fed Decides Then Justifies

By Andrew Busch | Published: November 4, 2010

Yesterday, the Federal Open Market Committee announced a new program of easing that entails buying US Treasury debt. The FOMC stated that, “…the Committee intends to purchase a further $600 billion of longer-term Treasury securities by the end of the second quarter of 2011, a pace of about $75 billion per month. The Committee will regularly review the pace of its securities purchases and the overall size of the asset-purchase program in light of incoming information and will adjust the program as needed to best foster maximum employment and price stability.”
The New York Federal Reserve detailed the purchases as … …READ MORE

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CNBC Video

By Andrew Busch | Published: October 22, 2010

Why I thnk mkts will b bummed after 11.2&11.3. http://www.cnbc.com/id/15840232?video=1622031592&play=1… …READ MORE

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Everybody on the QE2 Boat

By Andrew Busch | Published: October 5, 2010

The big story out last night was a Far East combo of central bank action and inaction. Both were a surprise. The action came from the Bank of Japan in their quest to stem the rise of their currency and to stimulate their economy. The BoJ started a program of quantitative easing that will see their balance sheet rise by $60 bln as they buy government bonds. They also said they would cut their benchmark rate from 0.1% to 0-0.1%.

The inaction came from the Reserve Bank of Australia, which kept their benchmark interest rate steady at 4.5% for the … …READ MORE

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99ers vs 26ers

By Andrew Busch | Published: August 30, 2010

Today, the WSJ carries an editorial from Harvard economics Professor Robert Barro entitled, “The Folly of Subsidizing Unemployment.” It explores a theory I subscribe to (and have been writing about for months) that the unemployment rate is higher than it should be due to the extension of jobless benefits from 26 weeks to 99 weeks.

Barro’s argument is the same one used in the 1990s that led to welfare reform in the United States. “The loss in efficiency results partly because the program subsidizes unemployment, causing insufficient job-search, job-acceptance and levels of employment. A further inefficiency concerns the distortions from … …READ MORE

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Recession 2011?

By Andrew Busch | Published: August 17, 2010

The San Francisco Federal Reserve has published a report that is generating a lot of buzz in the financial markets. Entitled, “Future Recession Risks”, the paper reviews the predictive capabilities of the US Conference Board’s Leading Economic Index. This report has been cited in several articles providing outlook for a double dip recession and generating additional angst for investors.

As most know, the LEI is published once a month by a private research group in New York City. It is composite comprised of 10 indicators that are known to swing up or down well in advance of the rest of … …READ MORE

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ECB Is Not the Fed

By Andrew Busch | Published: May 21, 2010

The calamitous actions and inactions by European officials continue to drive uncertainty throughout the financial markets. Overlaid on this, we’ve had fears generated from Australia’s commodity tax, China’s warnings on inflation, weaker than expected US inflation and economic data, the US financial regulatory reform legislation, and finally the retail pullback ($12 billion out) from equities generated from the Flash Crash. It’s a revisit of the sequential bad news that came out in early 2009. A conspiracy of bad things happening quickly.

There is one major difference and it has to do with central banks. The US and UK central banks … …READ MORE

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