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Full-Text Articles in Business
Fiscal Cliff, Steven D. Dolvin
Fiscal Cliff, Steven D. Dolvin
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There has been much discussion surrounding the impending "fiscal cliff." So, what exactly is this? Well, it is a combination of items that effectively equate to about $600 billion in potential spending cuts and tax increases. This represents about 4% of US GDP. So, failing to address these issues would likely result in a deep, prolonged recession. Read a good summary here, American Action Forum.
Step On The Gas, Steven D. Dolvin
Step On The Gas, Steven D. Dolvin
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With the economy hitting a "speed bump," market participants increasingly believe the Fed will "step on the gas" to get it going again. Similar thoughts seem to exist in regards to potential action by the Chinese central bank. As a result, markets around the world were up. See the articles here (xinhuanet) and
"Dumb Money" Pushing Treasuries, Steven D. Dolvin
"Dumb Money" Pushing Treasuries, Steven D. Dolvin
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Demand for Treasury bonds pushes prices up and yields lower. Given that Treasury yields are at all-time lows, the implication is that demand for these securities has increased. Many attribute this to buying by the Fed, but this demand is really being driven by retail investors. For contrarian investors, this would be an indicator to sell Treasuries, as retail investors are often referred to as "dumb money." See the article here, CNBC.
Leading Or Lagging, Steven D. Dolvin
Leading Or Lagging, Steven D. Dolvin
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Economists and investors often look to the index of leading indicators to predict the economic future. One measure included in this index is unemployment. However, some debate whether this is more of a lagging indicator since high unemployment hinders spending. In either case, recent news related to initial jobless claims has been positive. See the article here, Reuters.
The Ecb Is Not The Fed, Steven D. Dolvin
The Ecb Is Not The Fed, Steven D. Dolvin
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Although both the ECB and Federal Reserve are central banks, they are much different in their approach to managing their respective economies. The Fed's mandate includes both promoting growth and controlling inflation, while the ECB is really only designed to mitigate inflation. Thus, the ECB is not equipped to act in a speedy fashion as the Fed did in response to our financial crisis. (See the article here, Wall Street Journal.)
Expect Low Interest Rates To Continue, Steven D. Dolvin
Expect Low Interest Rates To Continue, Steven D. Dolvin
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As the "flight to quality" continues, interest rates will likely remain low for the nations considered to be the most stable (such as the U.S. and Germany). This is a simple supply and demand relationship, as interest rates represent the price of money. (See the article here, the Wall Street Journal.)
Germany Sells 0% Ytm Bond, Steven D. Dolvin
Germany Sells 0% Ytm Bond, Steven D. Dolvin
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With the problems in Greece (and other Euro countries), investors are seeking out safe havens. Similar to Treasuries during the Crash of 2008, investors are willing to accept no return, simply for the assurance that funds will be kept safe. (See article here, Reuters)