Mid-Year Summary

Despite a surprise slowdown of US economic growth in the first quarter, the stock market has continued to climb higher. The S&P 500 is up by over 7% year-to-date. US equity REITs have been especially strong, already returning more than 17% so far in 2014. Meanwhile, the benchmark 10 year US Treasury yield has fallen … Continue reading Mid-Year Summary →

Twist and Shout

The markets are quivering in anticipation of what the Federal Reserve may or may not announce later today. The consensus is that it will decide on implementing "Operation Twist." In this situation, the Fed would maintain short-term rates while reaching out to lower long-term rates, effectively "twisting" the yield curve. The idea is that lowering long-term rates will encourage borrowing, spending, and investment. However, … Continue reading Twist and Shout →

Bernanke Put

The markets seem to be hoping that good ol' helicopter Ben will come through with another round of quantitative easing (QE) tomorrow. Doing so would extend the legacy of the "Greespan Put" and probably ignite a speculative risk-on rally. Analysts like Dave Rosenberg and Bill McBride have pointed out how equity markets seem to be dancing around the Fed's QE activities, shown for … Continue reading Bernanke Put →

The Game Must Go On

This morning Ben Bernanke, Chairman of the Federal Reserve (the US central bank aka the Fed), delivered his semiannual report on monetary policy to Congress. During the report, Bernanke said, “the possibility remains that the recent economic weakness may prove more persistent than expected, and that deflationary risks might reemerge, implying a need for additional policy support.” … Continue reading The Game Must Go On →

Where are the Fed’s Reserves?

The Federal Reserve System, more commonly known as the "Fed," is the central banking system in the United States. As the term "central" implies, the Fed is the bank for other banks. As such, it plays a very important role in maintaining the stability of our financial system. Like other banks, the Fed basically uses a combination … Continue reading Where are the Fed’s Reserves? →