Bernanke on the Wires

Says:

• Using debt limit as bargain chip ‘quite risky’
• ‘Risky Approach’ not to raise debt limit if needed
• Failing to raise debt cap would hurt all borrowers
• Worst debt outcome would be ‘destabalized’ system
• Doesn’t see ‘a lot of crowding out’ of investment
• Debt is significant long run problem
• ‘Greater risks’ in fiscal situation
• Stimulus package probably increased employment
• Reducing unemployment helps migrate foreclosures

Bobbys Corner-Open Market-April.28.2011

Good Morning:

Fed Chairman Bernanke’s press conference added to the woes of the greenback in overnight trading. The Euro, GBP, and Aussie all set 2011 highs, as the Fed Chairman reaffirmed the Fed’s accommodating monetary policy.  Chairman Bernanke gave no indication as to when he is considering a change in policy, except that he will change it’s course until the employment picture and economic growth show significant traction.
Japan’s economic data was disappointing, but not completely unexpected, after the March 11 earthquake.  Household spending, industrial production  contracted at a record pace, with auto production cut in half.

Gold climbed to a record high overnight, as investors seek alternative investments-with precious metals on the top of the list.
Oil traded off it’s 31 month high-as speculation that slow US growth will hamper demand for crude.

Jobless claims rose 25K, and Advance GDP came in at 1.8% versus 2.0% that was widely expected.

Asian and European equity markets traded mixed-and US Futures are lower at this time.

Oil:$112.67                                                                   Gold:$1529.50

HAVE A GREAT DAY & GOOD LUCK 

Bobbys Corner-Open Market-April.27.2011

Good Morning:

Risk was back on center stage overnight-as Australian CPI data posted better than expected-pushing the Aussie through the 1.08 handle.
In the UK-GDP printed at .5%, which showed that the UK economy is fairly robust, even with their austerity measures and weak consumer sentiment.  The GBP rallied as many investors were anticipating weaker data.

Markets will be waiting for 2:15 PM this afternoon-which will signal the end of the FOMC meeting-and will feature Fed Chairman Bernanke’s press conference.  Markets are not expecting any interest rate increase at this time-but they are looking for any signal of when the Fed’s QE policy will be coming to an  end.

S&P cut Japan’s sovereign rating outlook to negative.  Costs for rebuilding the country after the March 11 earthquake will no doubt hurt the countries ability to produce products for export, which is the backbone of Japan’s economy.

Asian equity markets were mixed-Europe and US Futures are higher at this time.

Oil:$112.40                                                                 Gold:$1508.90

HAVE A GREAT DAY & GOOD LUCK

Bobbys Corner-Open Market-April.26.2011

Good Morning:

The USD got knocked back again in overnight trading.   Speculation that the Fed will keep interest rates low to help support the US economy is not dollar positive-and the markets have reacted as such. With Chairman Bernanke expected to keep policy and interest rates steady-USD weakness will continue.

CHF rose as investors continue to worry about sovereign government concerns in both Libya, and Syria-thus causing a rush to the safety of the Swiss Franc.

The Greek government says it needs to revise it’s 2010 budget upward-as a worse than expected  recession in Feb caused them to miss their goals.

ECB President Trichet stated that policy makers should be prepared to raise rates in order to curb inflation.

European equity markets are higher in Europe after Ford Motor and UBS both beat estimates.  Asian markets were mixed, and US Futures are higher at this time.

Oil:$112.31                                                                               Gold:$1505.80

HAVE A GREAT DAY & GOOD LUCK

Bobbys Corner-Open Market-March7.2011

Good Morning:

Despite another downgrade of Greece by Moody’s-the EUR/USD pushed through the 1.40 level in overnight trading.  The downgrade by Moody’s lowered the rating by 3 notches, and assigned a negative outlook for the country.
The markets will look to see the details of Mr. Trichet’s press conference today regarding the ECB’s intent on monetary policy and interest rates.
With higher interest rates on the horizon-the Euro has risen 9% versus the USD this year-the Euro seems to be resilient against all the negative sovereign debt problems facing the Euro Zone.  Some of the Euro’s strength has come on the heels of the USD, and that Fed Chairman Bernanle shows no sign of increasing interest rates anytime soon.

Oil continued to rise, and hit a 29 month high as fighting in Libya intensifies.  Gold also rallied as the political uncertainty in the Middle East continues.

Asian equity markets were mixed, while European equity markets rose-and US Futures are higher at this time too.

Oil:$106.52                                                        Gold:$1442.60 

HAVE A GREAT DAY & GOOD LUCK

Bobbys Corner-Open Market-Dec.6.2010

Good Morning:

We start this week with the USD stronger amid comments by Fed Chairman Bernanke on CBS’s 60 Minutes news program. 
The Fed Chairman stated that it may be possible to increase the US Governments bond purchase program to further spur the US economy-which is showing signs of anemic growth.  With Friday’s disappointing NFP data-and the unemployment rate jumping to 9.8%, the Fed must come up with a program to get the economy growing.  A 2.5% growth rate will keep the unemployment picture stable-so we need better  than 2.5% growth  to get unemployment lower, and jobs created.  He also stated that inflation is not a current concern-and that the Fed is keeping a watchful eye for any signs of  inflation.
European officials seem to be split on the steps needs to contain the sovereign debt crisis hitting the continent.  European Finance Ministers are heading to Brussels today to discuss and hopefully come up with an agreed upon program on how to get  handle on the debt issues plugging the EU.

Asian and European equity markets are mixed-and US Futures are lower at this time.

Oil:$89.05                                         Gold:$1415.60

NO MAJOR US DATA DUE OUT TODAY. 

HAVE A GREAT DAY & GOOD LUCK

Bobbys Corner-Open Market-Nov.19.2010

Good Morning:

The Euro showed some strength overnight-as speculation mounts that the “bailout” for Ireland will control the debt crisis in the EU from getting worse.  An agreement on the rescue  plan will help markets stabilize, and keep the fear factor at a minimum.
The USD lost steam as Fed Chairman Bernanke defends the current QE2 program to stimulate the faltering US economy.

Asian equity markets were lower after China announced that banks need to set aside higher reserve requirements to help curb inflation.  European markets are following suit this morning.  US Furues are also lower at this time.

Oil:$81.58                                                     Gold:$1347.50

HAVE A GREAT DAY-WEEKEND & GOOD LUCK

Bernanke’s Washington Post Op-ed

http://www.washingtonpost.com/wp-dyn/content/article/2010/11/03/AR2010110307372.html

FOMC Chairman’s Op-Ed in the Washington Post (click on the link above) explains his/the Feds reasoning for the increased QE conducted yesterday.  As discussed during our webinar on Tuesday, the Fed remains concerned about the low inflation/high employment that has persisted since reaching the abyss of the recession. Typically, unemployment moves lower, faster, after a steep recession and this in turn supports prices as businesses look to recoup from the recesssion.

 That has not occurred.  PCE fell to 1.2% YoY this week with MoM showing no change.  Next month, a 0.3% gain from a year ago, drops out of the calculation which should lower the PCE below 1% YoY.  Unemployment at 9.6% from 10.1% is not improvement.

The resulting effect from “this times” dead cat bounce, is lower incomes and expectation for lower prices (i.e. deflation or disinflation).  The Feds hinting of additional QE over the last month or so, has led to lower mortgage rates and could be spurring on some growth in that sector as a result.  However, judging from the change in interest rates on the longer end post the announcement yesterday, the effects on mortgage rates might have already seen the good news.  Today we saw Unit Labor Costs declining for the 3Q which is not good news for future spending. Workers need more money to spend more money. However, that is also now in the rear view mirror.

What we and the Fed will be looking at is the road ahead. Will the stimulus from the increased purchases find its way into the hands of businesses and ultimately in the consumers pocketbooks.  Will the resulting lower dollar lead to increased investment from abroad – even in housing?  Will exports of services from the likes of IBM, Oracle, Microsoft, lead to a more balanced trade picture and higher growth.  That is the road we will be looking at ahead.

For those worried about too much money being printed, it may be, but Bernanke feels he has no choice. However, be aware that if the Fed sees an increase in lending activity. If they start to see an increase in the velocity of money. If they see deleveraging slow. iIf they see job gains. They will tighten and take back fast.  When will that happen?  Time will tell, but indications remain that it will not be soon.

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