Skip to main content

Fed talks up recovery, but is it real?

The Federal Reserve is highlighting signs of recovery as officials leave benchmark interest rates unchanged; The FOMC has voted 10-1 to keep the target fed-funds rates at 0% to 0.25%.

There's also talk that the Fed will wind down its enormous MBS and housing agency bond purchases, according to Bloomberg and the Wall Street Journal. The FOMC will extend their program out to 2010 while slowing the pace of purchases in order to provide a "smooth transition" to the markets.

So we started the week off with a debate over Jim Grant's call for a snappy recovery, and now we have some more economic happy talk from the Fed. Despite tent cities cropping up all over the United States, the stock market (and long participants) seems happy. And why not?

From Bloomberg, "Stocks Extend Gains...":

"Equities have surged since March as the Group of 20 nations committed about $12 trillion to revive economic growth and the Fed kept overnight borrowing costs near zero to unlock credit markets.

The 58 percent rally in the S&P 500 since March 9 has left the gauge trading at about 20 times its companies’ reported profits from continuing operations, the highest level since 2004, according to data compiled by Bloomberg."

$12 trillion. That's the amount of money that has been thrown at this crisis. For now, the unprecedented liquidity infusion seems to be doing its work, keeping asset prices aloft. We may even continue to see higher stock prices here in the US for a time, but have we really left this crisis behind?

Related articles and posts:

1. Marc Faber: "Nothing has been solved" - Tech Ticker.

2. The Pinocchio Recovery - Market Talk.

Popular posts from this blog

Nasdaq credit rating junked.

S&P cut Nasdaq's credit rating to junk status citing debt burdens and its questionable strategy to buy a controlling interest in the London Stock Exchange. Financial Times reported that the exchange's counterparty credit & bank loan rating were lowered fromm BBB- (lowest investment grade rating) to BB+. The change will increase Nasdaq's borrowing costs should it wish to pursue aquisition targets. For an earlier look at the exchange consolidation trend that brought about Nasdaq's push for a stake in the LSE, please see "Exchange fever" .

Clean Money - John Rubino: Book review

Clean Money by John Rubino 274 pages. Hoboken, New Jersey John Wiley & Sons. 2009. 1st Edition. The bouyant stock market environment of the past several years is gone, and the financial wreckage of 2008 is still sharp in our minds as a new year starts to unfold. Given the recent across-the-board-declines in global stock markets (and most asset classes) that have left many investors shell-shocked, you might wonder if there is any good reason to consider the merits of a hot new investment theme, such as clean energy. However, we shouldn't be too hasty to write off all future stock investments. After all, the market declines of 2008 may continue into 2009, but they may also leave interesting investment opportunities in their wake. Which brings us to the subject of this review. John Rubino, author and editor of GreenStockInvesting.com , recently released a new book on renewable energy and clean-tech investing entitled, Clean Money: Picking Winners in the Green Tech Boom . In Clean ...

Seth Klarman: Margin of Safety (pdf)

Welcome, readers! Signup for free email updates at the Finance Trends Newsletter . Update: PDF links removed due to DMCA notice. Please see our extensive Klarman book notes below. New visitors, please check the Finance Trends home page for all new posts. Here's something for anyone who has been trying to get a look at Seth Klarman's now famous, and out of print, 1991 investment book, Margin of Safety .  My knowledge of value investing is pretty much limited to what I've read in Ben Graham's The Intelligent Investor (the book which originally popularized the investment concept of a "Margin of Safety"), so check out the wisdom from Seth Klarman and other investing greats in our related posts below. You can also go straight to Ronald Redfield's Margin of Safety book notes .    Related posts: 1. Seth Klarman interviews and Margin of Safety notes     2. Seth Klarman: Lessons from 2008 3. Investing Lessons from Sir John Templeton 4. ...