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Thread: FOMC Statement

  1. #1
    Legendry Member milos's Avatar

    FOMC Statement !!!

    President of the FED,Ben Bernanke said that monetary authority gradually reduce incentives later this year,perhaps they will be completely discontinued the following year,if the economy improves.Incentive tools tend to weaken the dollar and the announcement of ending them lead to the strengthening the dollar.Dollar after Bernanke's speech sharply higher against the other major currencies.Member of the Fed published they will continue to buy bonds worth $85 billion per month,for there option to reduce the costs of the program later this year if the US labor market continues to improve experience.Since 19th May met official, economic data were mixed.Employment growth has been steady and consumer continue spending despite increasing taxes and reducing government spending.U.S. stocks rose after the Federal Reserve began a two-day monetary policy meeting and many investors believe that the U.S. central bank to keep stimulus measures after weak data of inflation.Dow Jones climbed 0.91%,the S&P500 rose by 0.8% while the Nasdaq rose 0.87%. During the FOMC statament gold dropped below $1350 per ounce,silver dropped to $21.240 per ounce,crude oil dropped to $98 per barrel.

  2. #2
    Legendry Member Michael Hodges's Avatar
    Quote Originally Posted by milos View Post
    President of the FED,Ben Bernanke said that monetary authority gradually reduce incentives later this year,perhaps they will be completely discontinued the following year,if the economy improves.Incentive tools tend to weaken the dollar and the announcement of ending them lead to the strengthening the dollar.Dollar after Bernanke's speech sharply higher against the other major currencies.Member of the Fed published they will continue to buy bonds worth $85 billion per month,for there option to reduce the costs of the program later this year if the US labor market continues to improve experience.Since 19th May met official, economic data were mixed.Employment growth has been steady and consumer continue spending despite increasing taxes and reducing government spending.U.S. stocks rose after the Federal Reserve began a two-day monetary policy meeting and many investors believe that the U.S. central bank to keep stimulus measures after weak data of inflation.Dow Jones climbed 0.91%,the S&P500 rose by 0.8% while the Nasdaq rose 0.87%. During the FOMC statament gold dropped below $1350 per ounce,silver dropped to $21.240 per ounce,crude oil dropped to $98 per barrel.
    I think we're going to see a retest of gold lows around 1326 real soon. I also think the reaction to the fomc was overblown, the S&P 500 is back at the trend line and looking real good for a technical bounce.

  3. #3
    Veteran Member hchandra's Avatar
    QUOTE=Michael Hodges;8590]I think we're going to see a retest of gold lows around 1326 real soon. I also think the reaction to the fomc was overblown, the S&P 500 is back at the trend line and looking real good for a technical bounce.[/QUOTE]

    FOMC meeting last night really blow the picture out, its getting clear it seems that the dollar might be strong for medium long term.
    S&P 500 still safe above the trend line,
    Click image for larger version. 

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    I think buying at the trend line will be good idea, following the principle "If it is still working, why need to replace it

  4. #4
    Legendry Member milos's Avatar
    Ben Bernanke said that Central bank was ready to begin a gradual reduction of monetary stimulus.It is expected that the decision to reduce the reach of the next few meetings later this year and will probably come to the cancellation of the 2014.The Chairman of the Federal Reserve's statement led to a sharp rise the US dollar relative to the most currencies.According to forecasts,the FOMC is expected that the American economy in 2014 will increase 3%-3.5% and the unemployment rate to fall from current 7.6% to 6.5%-6.8%. Looser monetary policy has tended to have a positive impact on growth stock prices so that the signals of a possible reduction of bond buying program contributed to their decline yesterday.S&P500 fell 1.39% and Nasdaq fell 1.12%.

  5. #5
    Senior Member LeeChang's Avatar
    Quote Originally Posted by Michael Hodges View Post
    I think we're going to see a retest of gold lows around 1326 real soon. I also think the reaction to the fomc was overblown, the S&P 500 is back at the trend line and looking real good for a technical bounce.
    We hit 1305! Tremendous decline associated with the FED policy statement. All assets are trading this morning lower as compared to the US dollar, including all the major commodities, stock markets and currencies. This is a great revaluation of everything in dollar terms. It is hard to believe that a single Bernanke speech has such a tremendous impact on the whole world, but it has and this is just the beginning. Later this year when we see actual monetary stimulus decrease the market will have much greater decline than we initially expect, because that is the nature of the markets to overshoot in both directions from time to time

  6. #6
    Specialist Member marvel's Avatar
    The most important event for the week and probably for the whole month is the statement that FED is ready to reduce the monetary stimulus. It will have a long term effect and will dictate the market movements during the whole summer. I hope you guys made some wonderful trades yesterday Be careful now as the market is way oversold and there is a huge possibility to bounce from the low levels at the moment.

  7. #7
    Specialist Member TAllen1429's Avatar
    Yes, I agree with you about the significance of the Fed’s assertive statements released yesterday and how they will influence the markets.

    However, I have my concerns about the quality of progress that has really been achieved. Yesterday’s announcement was promoted on the US news channels as an indication that the US economy and labor markets were well on the way to recover. I just do not think this is reality.

    If I am correct then the Federal Open Market Committee (FOMC) was instigated in the 1930s during the Great Depression by President Roosevelt with the duel mandate of supporting the labor market and controlling inflation. In the years from then until 2008, the Fed’s balance sheet grew to just under $1 trillion. However, in the last 6 years, it has tripled to over $3 trillion as a direct result of stimulus measures to counter the irresponsible Ponzi type actions of Wall Street relating to sub-prime mortgages, etc.

    What has this straggling amount of money done? These actions so far have merely produced a meager growth rate of 2% by printing billions of new dollars a month. Many Eurozone members do not have access to such money printing facilities and their unemployment rates stand at 25% plus. Their labor markets are not artificially propped up by massive money easing programs.

    The Fed also does not have a good track record over the last 5 years with its predictions. In addition, it was bodies like it that created the nirvana conditions leading up to the 2007/08 crash in the first place. Now, we have identical type of bankers trying to solve the mess that they created.

    I am just not confident that we are anywhere out of the woods but that the world’s economy still has massive problems to overcome. If correct, the markets should see extensive levels of volatility over the next years. Finally, if there are serious underlying problems then they often materialize very quickly which could rapidly reverse any progress made as seen in 2007/8.

    Apologies for the long post.

  8. #8
    Legendry Member Michael Hodges's Avatar
    Quote Originally Posted by TAllen1429 View Post
    Yes, I agree with you about the significance of the Fed’s assertive statements released yesterday and how they will influence the markets.

    However, I have my concerns about the quality of progress that has really been achieved. Yesterday’s announcement was promoted on the US news channels as an indication that the US economy and labor markets were well on the way to recover. I just do not think this is reality.

    If I am correct then the Federal Open Market Committee (FOMC) was instigated in the 1930s during the Great Depression by President Roosevelt with the duel mandate of supporting the labor market and controlling inflation. In the years from then until 2008, the Fed’s balance sheet grew to just under $1 trillion. However, in the last 6 years, it has tripled to over $3 trillion as a direct result of stimulus measures to counter the irresponsible Ponzi type actions of Wall Street relating to sub-prime mortgages, etc.

    What has this straggling amount of money done? These actions so far have merely produced a meager growth rate of 2% by printing billions of new dollars a month. Many Eurozone members do not have access to such money printing facilities and their unemployment rates stand at 25% plus. Their labor markets are not artificially propped up by massive money easing programs.

    The Fed also does not have a good track record over the last 5 years with its predictions. In addition, it was bodies like it that created the nirvana conditions leading up to the 2007/08 crash in the first place. Now, we have identical type of bankers trying to solve the mess that they created.

    I am just not confident that we are anywhere out of the woods but that the world’s economy still has massive problems to overcome. If correct, the markets should see extensive levels of volatility over the next years. Finally, if there are serious underlying problems then they often materialize very quickly which could rapidly reverse any progress made as seen in 2007/8.

    Apologies for the long post.
    Keep them coming....

    As for the Fed, I want to point out something I just posted on a different thread. Big Ben signaled when he thinks tapering will begin and end....he also said that data, which the market is dependent on like a junkie with smack, is a thresh hold and not a trigger. Just because the data improves does not mean that tapering will begin. In addition, he also said that interest rates would remain at the current low levels into the foreseeable future (I think he actually said long into the future but Im not sure). Today's unemployment claims data does not indicate that tapering is near, in fact it appears from the data that initial claims for unemployment are holding steady, it also looks like jobs creation is holding steady and that new job seekers are entering the market. If these trends hold true then tapering is far, far away . . . but that causes its own problems,

  9. #9
    Specialist Member TAllen1429's Avatar
    Hi Michael, I am similarly puzzled by the issues you just mentioned concerning US unemployment claims and the labor market in general. I cannot see at the moment how these indicators are providing justification for tapering starting later this year.

    I am of the opinion that other factors are at work. For instance, the inflationary impacts of pumping so many new US Dollar bills into the economy.

  10. #10
    Specialist Member LesterK's Avatar
    It is a very difficult area of macroeconomic prediction you entered in discussion guys

    I don’t feel I could make a prediction of such great scale, but nothing is impossible. Firstly I think it is good the money printing initiated immediately after a deflationary crisis. But how long it have to continue is totally different question. The biggest concern is that it is possible that the markets are feeding of that money and they will reach a state where they won’t be able to sustain their valuation without these fresh money supplied. The FED printing will stop sooner or latter and than we will see a great stock crash, probably of the magnitude close to 2007-2009 crash. The other possibility which I don’t think is so probable is to overshoot our inflation target and to go well beyond 2%, for example the inflation could go to 4-5% which will be too dangerous for the economy and for creation of even much bigger bubbles than the existing ones. There are many dangers, but for now it looks the economy and the markets are trading almost smoothly.

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