Buffett’s advice on investing
March 3, 2008
On the 29th of February the Berkshire Hathway announced that it had completed an excellent year with respect to making profits. They said that the company was able to make a gain of almost 11 percent on its net worth at the end of the year 2007. the CEO of Berkshire Hathway announced on the 29th of February while he was facing the shareholders that Berkshire was able to grow it’s book value of per share by an overwhelming 21 percent on an yearly basis ever since he had taken the reins of the company almost 44 summers ago.
However the cautious crooked investor was quick in remarking that the performance the company was able to showcase in the last years might not be a guarantee for the future outcomes of the company’s ventures. He cautioned the investors that Berkshire is going to be restrained by the success the company has been able to achieve in the past few years. Berkshire, whose interest rates from chocolate making to making planes is predicted to be hit by the slimming in the gain margins.
While he was giving the report Buffett went on to boast that the successful record Berkshire has been able to maintain in the past can be neither duplicated nor repeated. He went on to say that the pool of assets as well as the revenues the company has now is too huge for any one to outsize. He however also noted that because of these huge earnings the company itself might not be able to make very big profits after a point of time.
The fact that such a comment was made right when most of the component companies of Berkshire had finished an exceptionally brilliant year, is a very good example to show how crooked an investor Buffett is. The underwriting gains dropped to almost $3.37 billion in 2007 from $3.84 billion in the year before that is taken into consideration. But this was the year when Buffett had announced that the insurance executives of his company had ‘simply shot the lights out’.
Another thing about which Buffett is concerned about is apart from natural disasters is the bill the government will come out with. This would force the company to tell the shareholders of the US companies that the company had actually been increasing their incomes by decreasing the amount of money that would be used for funding the different insurances.
If that situation isn’t bizarre enough, Buffett continues to note that if stocks were to return 10% yearly through this century, then Dow would touch 24 million by 2100. He advices all potential investors that investing in the equities blindly taking heed from various advisers wont be a good idea as the math just isn’t right.
Buffett, who is 77 at the moment, is unfazed about his age. He looks as fit as always and has no plans of retirement in his mind. The only thing he advised the people present at the meeting was to be careful when going ahead with their investments.
Bernanke concedes that the economic growth is going to be very slow indeed
February 28, 2008
On the 27th of February when the Federal Reserve chairman Ben Bernanke appeared before the House Financial Service Committee on Capitol Hill for the first day of testimony, he admitted that the growth rate of the nation in the current year is going to be very slow indeed. He also raised his concern about the overwhelming chances of the nation going into inflation.
The entire pool of investors and financial experts had their eyes on the Fed head on Wednesday as he embarked upon the mission of trying to summarize the huge amount of challenges the Federal Reserve was facing at the moment. Some of the main problems it is facing at the moment, according to him are that, the economy is currently at a very high risk of falling into a recession; the financial markets are totally unstable and volatile and the ever rising possibilities of inflation.
Bernanke as he faced the House Financial Service Committee admitted that the economy is facing a ‘difficult situation’. His remarks were made on the first day of the semi-annual trial regarding the Federal Reserve’s monetary policies till now. He told the House Financial Service Committee that the main challenge the Fed was facing was to make sure that a balance was attained between the risks involved and the activities that Fed was undertaking. He also said that determining at a particular point of time which risk is more serious is also very important for the journey ahead.
The testimony he made to the lawmakers however made one thing very clear: the economy was the still the prime concern of the central bank. His prepared testimony gave enough evidence to imply that the downside risk to growth that was there earlier is still there at large. All the comments and remarks Bernanke made was in sequence with the Federal Reserve’s recent stance. It was also a follow-up of the comments he had made almost two weeks earlier along with the Treasury Secretary Henry Paulson in front of a Senate panel. At that time both of them had said that the U.S. economy was not going to do to well this year but that it would be able to avoid the recession that has been forecasted as a result of a $170 billion plan that had been approved by President Bush on the 13th of February. The interest rate cuts the Fed have been implementing is also another factor according to him that will help the country in avoiding a recession.
As his testimony was released, the markets at the outset turned higher. This is because the investors found enough from his words that the Federal Reserve was prepared go forward with its interest rate cuts to boost the economy even further.
Speaking about Bernanke’s testimony on the 27th many of the e
The uneasiness increases further
February 18, 2008
Many American citizens are of the opinion that the living conditions in the country is getting more uneasy by the day. This opinion is coming even while most of the economists in the country are of the opinion that the economy of the country is healthy enough to get out of the minor troubles it is in at the moment.
In the last few years when jobs were available in plenty and it was relatively simple and cheap to borrow many people did not feel that everything was right. High prices of homes and the availability of plenty of credit cards allowed the people of the country to go out and splurge on commodities. But even during those golden days many people felt things were not right. Now that the golden period has come to an end finally the undertow that was present ever since then has gotten stronger. Now if the easy credit is taken away most of the consumers in the country find that the pay cheques they get have not kept the same pace with their needs and their affinity to spend cash.
The hard truth that they have to pay $3 for gas and $4 for milk has finally hit the people of the country who earlier were not too concerned about the fact. The health care expenses most people of the country incur in a year are almost four times the amount they get as pay. Even the certainty of getting the retirement security that they have been promised is solely dependant on the state of the stock market.
The confidence of the American consumers are decreasing by the day and the main reasons that can be attributed to this are the collapse of the housing market in the country, unavailability of credit and the heavy debts most people in the country have. All this when combined with the anxiety that was there all along broadcasts the situation out of control. The fact that the economy is currently in a recession or on the verge of going into one is definitely playing on the people’s minds. The increasing levels of anxiety and fear that is present in the people’s mind right now is not going to go away any time soon even after the economy shows some signs of improvement.
Much of the anxiety that is present right now is because of the uncomfortable feelings that one gets from the economic roller coaster ride. The consumers become less confident about clinging on to their jobs or about getting new ones. The growing fear of meeting the household expenses and other future prospects make the life of the people even more uneasy.
The truth that the people of the nation have been facing for quite some time is visible from the fact analysis which was taken months before the economic crisis broke out. The report showed that nearly 2 out of 3 Americans felt that the economy was not as secure as it used to be nearly a decade ago. Another half said that the economy was going to get even worse in the future.
Mortgage rates almost unchanged
February 15, 2008
As the week comes to an end the mortgage rates were mixed throughout the country but remained largely unchanged. The mortgage rates did not go through any amount of significant change even as the labor productivity went higher than the predictions this week and the pending sales of the innumerable homes weakened as per the report of Freddie Mac on Thursday this week. This left the people who are trying to get a refinance done in a tricky position.
The loan purchaser who is sponsored by the Government said that the thirty year fixed rate loans were averaged at 5.72 percent as the week came to an end. This was actually higher than the previous week’s standing, which was at 5.67 percent. But Freddie Mac said that last year at the same time the rate was averaged at a figure of 6.3 percent. The rates for a fixed rate loan for 15 years averaged at 5.25 percent which was higher than last week’s rate of 5.15 percent. The rate for a fifteen year fixed rate loan at the same time last year was however averaged at 6.03 percent. When the rates for a five year adjustable rate loan were averaged at 6.01 percent in the previous year, this week it was averaged at 5.19 percent after it came down from last week’s average of 5.21 percent.
The average rates of one-year Adjustable Rate Mortgages (ARMs) which are indexed by the treasury were at 5.03 percent at the end of the week and this was the same average in the previous week too. The average rate of this one year ago at the same time was however 5.52 percent.
Since the amount of economic data that was let out was relatively small the present state of the economy remained in a situation of haze and doubt. According to Freddie Mac vice president and chief economist Frank Nothaft, this was one of the main reasons as to why the mortgage rates remained almost unchanged. Freddie Mac however believes that once more data regarding the present scenario of the current economic situation is let out the confusions that are present now about the credibility of the economy would clear. This would ultimately lead to the mortgage rates changing by a significant amount. Now that the stimulus plan has been authorized by the President the home owners are going to find getting a refinance for their home relatively more easy.
He however said that one of the good things that happened in the week is that the labor productivity went higher than what was expected in the last quarter of the year 2007. Another thing that happened in the labor sector is that the profits in the labor expenses slowed. But he also said that the existing sale of homes which were pending went down in the month of December. This was reason enough to indicate that the home sales were going to be very weak in January and February as well.
Refinancing is becoming a difficult task
February 12, 2008
When many people in the country are happy that the mortgage rates have gone down in the country, the scene behind the curtains is that most people are finding it more and more difficult to get a refinance done for their house. Since this is the best time do a refinance with the rates as low as possible, many people are trying their best to get a new loan for their house or property. On Friday the 8th of February, the news from Washington was that the rates were at an all time low in the last few days.
The people who are the worst hit because of this difficulty are the people or borrowers who have taken loans or mortgages in the form of Adjustable Rate Mortgages (ARMs). This is because of the fact that these mortgage people are now resetting their interest rates and the borrowers are left with no other option but to go for a refinance. This they cannot do because the requirements that is required to qualify for a refinance now is very high.
Most banks and mortgage agencies are now telling off almost 60 to 70 percent of the people who approach them for a refinance. This is the case with almost all banks and agencies in the country. The grounds on which the people are not given a new loan are many. The problem that arises most often is that almost all the people who approach will not be having enough equity or would be having a bad credit score.
The funny part about this situation is that while the industry was booming the lenders used to approve almost anyone for a refinance without even going through half of their credit reports. But right now this is just not the case. The brokers and banks are now very selective about the clients whom they would give approval for a mortgage or loan. If they think that the client has too bad a credit report or that their property is losing its value at a very fast pace, they just turn them down right at the beginning. The banks will only consider a refinance if they find that the person has a reasonably good income, strong assets, and a high credit score. They need to have a good guarantee that the money is there to retrieve. If they see neither of this it is almost impossible to get a mortgage loan now.
The interest rates in the country are at an all time low right now. As of today the interest rates are way down at 5.67 percent which is the rate for a 30 year fixed loan according to Mr. Freddie Mac. This is the prime reason as to why there is such a rise in demand for refinance now. This can be seen from the fact that the number of applications for refinance have gone up by 73 percent last week from the previous year.
Tyco International Inc. reports fall in earnings
February 8, 2008
On the fifth of February, the representatives of the diversified manufacturer Tyco International Inc. said that on Monday, it’s fiscal first quarter of a year earnings have fallen by 54 percent from the previous years. Same time a year ago, which also included its health care and electronics business which is no more a part of the company, the company’s earnings were a figure 54 percent higher than the present figure. Although the earnings have fallen by such a big figure the adjusted profits of the company was enough to top the Wall Street expectations by a reasonably wide margin.
The part of the company which is engaged in making security and fire protection products, has earned a remarkable figure of $363 million, which is almost 73 cents per share that was purchased. This was in the quarter that ended on the 28th of December. Anyhow, the figure becomes less remarkable when we come to know that the earnings of the same company in the quarter one year ago were $793 million, or almost $1.57 per share that was purchased. Excluding these items the company Tyco earned 49 cents per share from continuing operations in the 2006 period.
Earlier in the previous year in the month of July two segments of the Tyco Company spun off and began working as two separate independent entities. They are the Tyco Electronics and the Tyco health care business Covidien ltd.
The interesting thing to note now is that the revenue which the international company had pre announced in the month of January came to a total of $4.87 billion. This was very much against the analyst’s approximate estimate of $4.75 billion and this was very much more than the previous year’s sales which were only$4.37. So essentially, this year’s revenue had increased by an amazing figure of 12 percent.
According to the analysts who studied the growth of the company, its growth can be attributed to the strength it has acquired in its flow control and ADT worldwide businesses. The other factor which can also be held responsible is the lower corporate expenses.
On Tuesday this week, the shares of the company fell 94 points to touch $40.22 when trade opened on the day. But on the other hand, Tyco’s largest as well as most well known division, the ADT security monitoring business, had a 7 percent jump in its revenues this year. This was mainly due to the double digit growth in the Asian and Latin American countries.
After all the hue and cry the shares of the company’s share created the Tyco International Inc. has again ascertained that its 2008 profit prediction will be what it had said itself. This is including the raise the company had made only one month before which was of the range of almost $2.60 to $2.70 per share. But this prediction is excluding the separation and restructuring charges that were borne by the company as a part of the spin off of the 2 divisions of the company.
Federal Reserve Cuts Primary Discount Rate
August 17, 2007
The US Federal Reserve has today announced it has cut the primary discount rate of interest, at which it lends to banks and mortgage lenders.
The news comes after a week of poor trading on stock markets around the world off the back of major doubts about the future of the world economy.
Analysts had feared that growing defaults and liquidity problems spawned by the rogue sub-prime lending market in the US would lead to a global credit crunch, whereby businesses and prospective home owners would be faced with tougher lending policies in a bid to preserve resources.
Last week, the Federal Reserve announced its decision to inject more cash into the banking system as an emergency aid measure.
Today’s news, which sees rates fall from 6.25% to 5.75% are designed to make it easier and cheaper for banks to borrow from the central reserve, which in turn should help ease concerns over credit availability.
After poor trading on world markets this morning, investors were buoyed by this complimentary measure, created to add further weight to the cash aid pledged last week.
After weeks of poor trade across the world, most major markets were sent soaring off the back of the news, which will prove to be a relief for shareholders and investment plans - particularly corporate pension funds, which have been hit badly over the last few days.
The Federaql Reserve strategy has been welcomed by analysts, if not considered extremely unorthodox. The Federal Reserve had not been expected to make any ammendments to interest rates before its September meeting.
The last time the Federal Reserve made any interest rate changes between its six-weekly meetings was September 11th 2001, highlighting the urgency with which the Reserve considers its actions in saving the ailing mortgage market.
US Price Inflation Marginally Up
August 15, 2007
US inflation has fallen of the course of July, according to official figures released today.
The Consumer Price Index, which reflects the value of a typical consumer spend, grew by just 0.1% over the month, according to the figures released by the Labor Department today.
Analysts have attributed the falling cost of fuel through the decreased price of crude oil could be a major factor in suppressing inflation, a claim that is given further weight by the core rate of inflation on the month.
The core rate of inflation, calculated without including food and fuel prices, was shown to have risen by 0.2%, showing the impact of the falling oil price on US consumer inflation.
Additionally, today’s figures reflected a fall of 1.7% in petrol at the pump, showing the knock on effect of import crude oil prices on daily life, and the dramatic impact of lowering prices on US consumer inflation.
The news was well received by the Federal Reserve today, who have chosen to maintain interest rates at 5.25% to keep inflation under control for an unusually long period of time.
Analysts have predicted that today’s figures should be sufficient to maintain interest rates at their current level for next month, after the Federal Reserve meet to determine their next step.
The Federal Reserve, the central authority responsible for setting interest rates in the US, are expected to maintain interest rates for the fourteenth consecutive month after today’s indication that inflation is under control.
However, the Federal Reserve have been criticised for their lack of intervention in markets over the last year, where interest rates have remained solid despite changing economic circumstances.
The Federal Reserve will meet at the beginning of next month to discuss interest rate policy for the coming thirty days.
US Interest Rates Hold Fast
August 8, 2007
The Federal Reserve yesterday announced its decision to maintain interest rates at 5.25% for the thirteenth consecutive month.
The US Federal Reserve made the announcement that interest rates would remain constant as analysts predicted, even in the face of apparent deep-rooted economic problems.
In spite of growing worldwide concern as to the health of the US economy, the Federal Reserve made its announcement yesterday as anticipated by analysts, maintaining interest rates at their current, consistent level yet again.
Interest rates in most major world economies have been raised over the last year or so in order to reign in global economic growth and avoid an international recession.
The US economy has very much bucked this trend, with interest rates remaining unchanged for over a year as problems within the housing market and sub-prime mortgage lending continue to cause problems for economic growth and recovery.
With many of the major US mortgage lenders approaching financial ruin through the lax regulation of the sub-prime market, and defaults rapidly increasing, housing appears to be the main catastrophe within the US economy.
Despite comments from the Federal Reserve over the last few days as to the lack of impact of recent events in the US economy, indicators from the various US institutions have painted quite a different picture.
The Bank Of England Governor Mervyn King offered some support to the US economy in a statement made today, in which he proclaimed the recent events in the US had fallen short of an international crisis, and that the problems with the US housing and lending markets weren’t likely to have a disastrous effect on other markets.
The news comes as little consolation after volatile trading figures and some poor company results over the last few weeks derived as a direct result of the US situation.
Studies: US minorities in big cities pay more for mortgages
March 16, 2007
Two different reports, one from the Woodcock Institute, based in Chicago, and the other from the University of Massachusetts Boston have found that minorities in the United States are more likely to get home loans at higher interest rates in large cities around the country.
The Woodcock Institute study, carried out in cooperation with four other groups, looked at lending practices in Boston, Charlotte, Chicago, Los Angeles, New York City, and Rochester, New York. It focused on lending institutions Citigroup (NYSE: C), Countrywide (NYSE: CFC), GMAC, HSBC (LSE: HBSA; NYSE: HBC; Euronext: HSBC; SEHK: 005), JPMorgan Chase (NYSE: JPN; TYO: 8634), Washington Mutual (NYSE: WM), and Wells Fargo (NYSE: WFC). In the six cities studied, the study found that African American borrowers were 3.8 times more likely to get a higher-cost loan and Latinos were 3.6 more likely to get a higher-cost loan than were white borrowers in those cities.
The University of Massachusetts Boston study, carried out by economics professor Jim Campen, was more narrowly focused on Boston, found that high-income minorities were between six and seven times more likely than high-income whites to have a high-interest mortgage. Specifically, Professor Campen found that 70 percent of African American and Latino borrowers in Boston who had incomes between $92,000 and $152,000 had high-interest mortgages. Professor Campen attributed some of the disparity to suspicion of the banking system among minorities and to aggressive recruiting tactics from subprime lenders.
Bernanke says US economy will grow moderately
February 14, 2007
US Federal Reserve chairman Ben Bernanke said in testimony before Congress on Wedensday that the nation’s economy should continue to grow moderately even though the housing market could still falter more than currently expected, hurting growth overall. He said that he expects inflation to continue to moderate but that there is still some risk and would not rule out further interest rate increases.
Mr. Bernanke specifically said that it would be “some time” before the Fed will be confident that inflation is moderating as expected, and that if it does not that the Fed is prepared to deal with it by raising interest rates further. Still, he said that the current rate, at 5.25 percent, is “likely” to both sustain economic growth and allow core inflation to decline.
Addressing the fears of some Democrats that the gap between rich and poor in the United States, which has widened recently, Mr. Bernanke said that the key to reversing this trend lies in providing education and job skills training. He also addressed the record US trade deficit, saying that protectionism is not the solution. He also said that China must do more to make its currency more flexible.
Following Mr. Bernanke’s comments, the US dollar weakened on global currency markets but the price of treasury bonds and the New York equities markets both saw advances.
GDP up in US in fourth quarter
January 31, 2007
New data released on Wednesday showed that the gross domestic product in the US was 3.5 percent higher in the final quarter of 2006, following on a gain of 2 percent in the third quarter. However, the rise in core prices were up at rate of 2.1 percent after growing by 2.2 percent in the previous quarter. Most of the growth was said to be linked to a 4.4 percent rise in personal consumption during the quarter.
The new data did not have much influence on the Federal Reserve’s latest interest rate decision. The Fed left interest rates at their current 5.25 percent. Most analysts believe that the Fed is more likely to raise than to lower rates later in the year. Still, most expect that rates will neither rise nor fall either today or later in the year even though many analysts still see a moderate risk for inflation.
Where the new GDP figures did have an effect was in currency and government bonds markets. The dollar was higher versus both the yen and the euro. In addition, yields on US Treasury bonds rose, with ten-year issues yielding 4.9 percent and yields on 30-year paper up to 5 percent. After the Fed announced its interest rate decision, leaving the rate at 5.25 percent for the fifth meeting in a row, yields on 10-year bond dropped to 4.84 percent.
Comments lead to rate hike expectations
June 7, 2006
The US dollar strengthened for a third straight session on Wednesday as officials of the Federal Reserve continued to make comments indicating that interest rates will likely be raised again when the Fed meets later in the month. Several regional Fed presidents as well as Fed chairman Ben Bernanke have said in recent days that inflation is now at the upper end of what has been referred to as the “comfortable” range. Earlier, analysts had been convinced that the Fed would break its chain of 16 consecutive rate hikes.
The greenback added 0.4 percent to SFr1.2270 in relation to the Swiss franc, 0.2 percent to $1.2796 versus the euro, and was up 0.1 percent each against the Japanese yen and against sterling, to ¥113.37 and $1.8575 respectively. Additionally, the US currency added 0.3 percent to T$32.166 versus the Taiwan dollar and was up 0.6 percent to Won947.9 in relation to the South Korean won.
Analysts are not in agreement as to whether the dollar will continue to strengthen or whether it will begin to weaken again. While some feel that the dollar will continue to strengthen, others believe that if the Fed continues to raise interest rates, it will harm the US economy, affect the global economy, and will weaken the greenback further.
Analysts expect US interest rate hike again in June
June 1, 2006
The US dollar was a bit stronger on Thursday, but it had been stronger still before some data hinted that concerns about inflation were at least partly misplaced. The Institute of Supply Management’s May survey had US factory activity at 54.4, lower than the 55.5 reading that had been expected. In addition, unit labor costs for the first quarter came in at a 1.6 percent gain, year-on-year. This was lower than the 2.5 percent rise reported last month and lower than the gain of 1.9 percent that had been expected.
Still, with the release of the minutes from the US Federal Reserve meeting in May showing that the Open Market Committee had considered lifting interest rates by 50 basis points at that time, most analysts now expect another rate hike this month. US interest rate hikes have been coming in 25 basis point increments since the current cycle of increases began.
All this news combined to give the greenback a gain of 0.2 percent to $1.2821 versus the euro and sent it 0.3 percent higher in relation to the Japanese yen, to ¥112.43.
Concerns send dollar lower
May 10, 2006
The US dollar weakened further on Wednesday ahead of the Federal Reserve’s decision on whether to raise interest rates again, this time to 5 percent, as well as in anticipation of comments that might give a hint about whether there might be a pause in the series of rate raises in June. Investors were still nervous, as well, about a US Treasury report due later in the day that some say could label China as a “currency manipulator”. Even if this does not happen, triggering Asian currencies to advance against the greenback, comments from Harvard economics professor Martin Feldstein that the dollar might need to weaken a further 30 to 40 percent in order to bring the US trade deficit down were worrying to investors.
By the middle of the day in New York the US dollar had dropped 0.3 percent to $1.2792 versus the euro. The greenback was also down by 0.5 percent against the Japanese yen to ¥110.55 and it dropped 0.1 percent to SFr1.2192 in relation to the Swiss franc. The US currency hit yet another new 28-year low of C$1.0980 versus the Canadian dollar. The only major currency that the dollar did not weaken against was sterling, which was down just a bit to $1.8650.
Bernanke: rate rises might pause
April 27, 2006
In testimony before the US Congress on Thursday, Federal Reserve Chairman Ben Bernanke said that it is his belief that economic growth in the US will become more moderate as the year progresses and that this will put growth at a “more sustainable” level. He also said that at some point the Fed will likely wait out a month or two without raising interest rates in an effort to “receive information more relevant to the outlook”. Despite these comments, it is still expected that the Fed will hike interest rates by another quarter point, to 5 percent, when it meets next on May 10.
US Treasury bonds saw yields drop in reaction to Mr. Bernanke’s comments. The two-year bond dropped 6.4 basis points to a yield of 4.925 percent, while the slightly less-sensitive to rates ten-year bond was down by 2 basis points to 5.090 percent. The dollar weakened in response to the remarks, hitting $1.25 versus the euro, a seven-month low. Sterling added 1 percent against the dollar, to $1.80. The equities markets were initially up after hearing Mr. Bernanke’s testimony, but then turned mixed as investors had time to absorb his comments.
Among other remarks, Mr. Bernanke said that rising energy prices were a concern, posing risks to inflation and to economic activity, but that if prices stabilize their negative effect should be minimized. He also commented on the housing market, saying that while the outlook there is uncertain, current data indicates that this sector of the economy should cool down gradually rather than experiencing a sharp downturn.
US inflation up only 0.1 percent
March 16, 2006
Inflation was up only slightly in the United States in February as the Consumer Price Index was up by 0.1 percent, down from a rise of 0.7 percent in January. The new data indicates that inflation remains well under control and made some analysts speculate that it won’t be long before the Federal Reserve halts its series of interest rate hikes. While they still expect another rate hike at the end of the month, some analysts now expect that the series of hikes, now at 14 meetings in a row, will pause sooner rather than later.
The core inflation rate, excluding prices on foods and energy, was also up just 0.1 percent, less than the 0.2 percent that had been expected. In the year ending in February, core inflation was up 2.1 percent, while inflation taking in all sectors had risen 3.6 percent in the year.
Even though inflation remains low, however, separate data indicated that wages are not keeping pace with rises in the cost of living.
The new inflation data brought mixed results for the US dollar in currencies markets. At midday in New York, the euro had risen 1.2 percent in relation to the greenback, to $1.2153, while sterling was up 0.5 percent against the dollar to $1.7553. The yen, however, dropped versus the dollar, by 0.5 percent to ¥117.
Dollar up ahead of Fed minutes
February 21, 2006
The US dollar was up on Tuesday in early-day trade in Europe as traders awaited the release of the minutes from the most recent meeting of the US Federal Reserve. The minutes from the January 31 meeting, Alan Greenspan’s last as Fed chairman, are expected to support at least two or three more interest rate hikes. Some analysts, however, warned that the advances in anticipation of the minutes could lead to declines once the minutes actually are released.
At any rate, the greenback was up to $1.1906 in relation to the euro and to ¥118.86 against the Japanese yen. The dollar was nearly unchanged in relation to sterling, trading at $1.7443.
Dollar up ahead of Fed minutes
February 21, 2006
The US dollar was up on Tuesday in early-day trade in Europe as traders awaited the release of the minutes from the most recent meeting of the US Federal Reserve. The minutes from the January 31 meeting, Alan Greenspan’s last as Fed chairman, are expected to support at least two or three more interest rate hikes. Some analysts, however, warned that the advances in anticipation of the minutes could lead to declines once the minutes actually are released.
At any rate, the greenback was up to $1.1906 in relation to the euro and to ¥118.86 against the Japanese yen. The dollar was nearly unchanged in relation to sterling, trading at $1.7443.
Bernanke says US rates may rise more
February 15, 2006
The new chairman of the US Federal Reserve, Ben Bernanke, in his first testimony in front of Congress after taking office, said on Wednesday that the US economy “performed impressively” last year. He also refused to close the door to further interest rate hikes, saying that higher energy prices could mean higher consumer prices, possibly fueling inflation. Mr. Bernanke promised, however, that the Fed would be “flexible” in regards to monetary policy decisions that that “all” relevant evidence would be taken into consideration before making those decisions.
Mr. Bernanke also acknowledged that a slowdown in the housing market could be a risk to the economy, but that such a slowdown would not necessarily signal a slowdown of the entire economy. And, in fact, his testimony came just a day after retail sales data showed that the US economy expanded in January after having performed below expectations in the fourth quarter of last year.
While the new chairman has indicated an intention to continue with monetary policies put in place by his predecessor, Alan Greenspan, he is also known to favor specific targets for inflation, unlike Mr. Greenspan. These targets, Mr. Bernanke believes, will increase transparency in the activities of the Fed as well as reduce the market speculation that surrounds uncertainty about future monetary policy decisions.
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