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News — the fed

Fed Interest Rate Cuts Could Hurt World Currencies Down the Road

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By John McDonald On Wednesday, July 31, 2019, the Federal Reserve cut interest rates for the first time in a decade in an effort to sustain the country’s longest-running economic expansion ever. Citing “downside risks from weak global growth and trade tensions,” Fed chairman Jerome Powell said he hopes the quarter-point cut will ultimately keep the national economy going strong. Unfortunately, the immediate effects mainly consisted of the S&P 500 falling the most it had fallen in about a month (1.1 percent) and a fair amount of presidential criticism for the already beleaguered chairman. The Cut Could Hurt Global Currency...

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Lessons and Reactions From The Federal Reserve’s June Policy Statement

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By John McDonald  On June 19, 2019, the United States Federal Reserve Board of Governors released a policy statement based on the recent meeting of the Federal Open Market Committee. Market reaction was swift and substantial. Nearly immediately, the yield on the 10-year Treasury Note fell below 2% since November of 2016. CNBC describes 2% as “a key psychological level”, though such language is, at best, nebulous. Regardless of the “psychological significance” of the fact that the 10-year note dropped below 2%, substantial downside moves in that key interest rate can absolutely have a serious impact on everyday financial issues...

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MarketWatch Claims Investors Are More Bearish Than Anytime Since 2008… But Are They?

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By John McDonald Both the S&P 500 and the Dow Jones Industrial Average have been booming upwards with hardly a pause since the day after Donald Trump won the Presidency of the United States in November of 2016. Having bolted upwards by over 40% from then to today’s close at 3,003.67, the S&P 500 appears strong and headed higher still. Yet the “experts” at MarketWatch tell us that investors have not been this bearish since 2008. Something seems a bit “off”. One wonders: Who are the “investors” to whom MarketWatch refers? Are these “investors” actually representative of the collective psyche...

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Presidential Criticism of European Central Bank President Raises Fear of Currency Wars

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By John McDonald Despite suggesting earlier this summer that European Central Bank President Mario Draghi would be better in charge of the Federal Reserve than sitting chairman, Jerome Powell, President Trump has recently criticized Draghi for aggressive monetary tightening in Europe.  Draghi had signaled that the ECB could lower interest rates as early as July while speaking at a central-banking forum in Portugal. The euro responded by plummeting in value while global equity markets reacted positively to the news that the ECB might restart its bond-buying program to support the Eurozone economy. President Trump’s issue with Draghi’s policies came in...

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Next Financial Crisis Triggered by Global Market Shock

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By John McDonald With more and more economists speaking freely of the next recession not as a possible economic swing to be avoided but rather as something now unavoidable, it came as no surprise when market bear and NYU economics professor Nouriel Roubini warned there is a growing risk of a recession as soon as 2020. Roubini and colleague Brunello Rosa published a list of 10 potential downside risks that could trigger a U.S. and global recession. In his analysis last week, Roubini said bleakly, “Nine of them are still in play.” Roubini cited, “trade wars with China and other...

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