(Stocks fall) Fed Drops `Considerable Period' Outlook on Rates

[papau]

I loved the FED's "new hiring remains subdued" - ...sigh


Fed Drops `Considerable Period' Outlook on Rates, Says It Can Be `Patient'

http://quote.bloomberg.com/apps/news?pid=10000006&sid=a4WJ89SOaULQ&refer=home

Jan. 28 (Bloomberg) -- Federal Reserve policy makers unexpectedly dropped a commitment to hold interest rates low ``for a considerable period'' while voting to keep the benchmark U.S. interest rate at 1 percent. Treasury prices fell. The Federal Open Market Committee said it still can be "patient" in holding down borrowing costs, a language change that some investors said may show a rate increase will happen sooner than they expected. The FOMC voted unanimously to leave the overnight bank-lending rate at the lowest since 1958, according to the statement after its two-day meeting. "With inflation quite low and resource use slack, the committee believes that it can be patient in removing its policy accommodation," the statement said. The Fed said "output is expanding briskly" and "new hiring remains subdued," while other indicators "suggest an improvement in the labor market." Only two of the 23 firms that trade securities directly with the central bank had expected the Fed to drop the "considerable period" wording, which had been in each statement since August. <snip>

The dollar surged against the euro and the yen in New York. At 3 p.m. in New York, the dollar strengthened to $1.2509 per euroe from $1.2646 yesterday. The U.S. currency advanced to 105.85 yen from 105.55, close to the lowest since September 2000. Jon Blumenfeld, an interest rate strategist in New York at primary dealer BNP Paribas, said he sees the language change as "one step closer to tightening."" <snip>


http://quote.bloomberg.com/apps/news?pid=10000006&sid=a_1pIZswzC5s&refer=home

Treasuries Fall After Fed Drops Considerable Period Phrase Jan. 28 (Bloomberg) -- Treasuries tumbled after the Federal Reserve dropped the phrase a ``considerable period'' in describing how long it can keep its target interest rate at 1 percent. The decline in the benchmark two-year note was the biggest in three months. <snip>

Before U.S. Stocks Drop as Fed Changes Wording on Rates; Homebuilder Shares Slide

http://quote.bloomberg.com/apps/news?pid=10000006&sid=aC0rcC0SYVRY&refer=home

Jan. 28 (Bloomberg) -- U.S. stocks fell after the Federal Reserve unexpectedly dropped its commitment to hold interest rates low "for a considerable period," sparking concerns that higher rates would raise corporate borrowing costs and slow profit growth. Homebuilders such as Centex Corp., KB Home and Pulte Homes Inc. led the decline. "The Fed was eventually going to have to say there will be a period where we will have to raise rates," Robert W. Smith, who manages the $5.8 billion T. Rowe Price Growth Stock Fund, said in a televised interview with Bloomberg News. "The market, while it knew it was coming, didn't want to believe it was today."snip>

[twilight]

1. the party is over

If you got any bucks in this joke, now is the time to S E L L !!!!!

:kick:

[Just Me]

17. "Capitalism is not working!"

In "The Price of Loyalty", Greenspan is recorded as clapping his hand on the table and in a raised voice stating, "There's been too much gaming of the system until it is broke. Capitalism is not working! There has been a corrupting of the system of capitalism."

Geez,...doncha' wish this guy had the balls to actually say that to the American people? Instead, we're being fed a fantasy while being herded towards a train wreck,...well, actually, several train wrecks.

[ramapo]

2. Reality bites

Traders are a sensitive bunch. But the situation of high debt, low rates cannot be maintained.

[papau]

3. "new hiring remains subdued" says it all

:-(

[Don_G]

4. I Wonder If The Expected 5 Trillion Deficit

Had anything to do with it?

How many grand-children now will it cost to replace a water-heater in 20 years?

I expect ya'll should get busy and fuel the health-care and real-estate markets in the next 9 months before the jobs disappear like Regan's tax-breaks left Clinton with only a Penis to work with....

No slur intended; It started with Regan and won't end until the PNAC comes up short by 6 inches per person.

[Hokie]

5. My take on Greenspan

I think that Alan Greenspan did more than any person (excluding the 5 AH's on the SCOTUS) to get Bush* "elected". For the last two years of Clinton's term he raised rates and talked down the market and the economy. Since Chimpy has assumed power Greenspan has continued to lower rates and paint a rosy picture that the debt does not matter. He managed to keep the balls in the air through the 2002 midterm election but eventually realities will have to addressed. Interest rates will have to rise. That will kill bond prices and stocks will suffer also. The shrinking dollar is already putting pressure on foreign investors to sell US stocks and bonds since they have seen their investments shrink 30% against the Euro and gold.

It will be interesting to see if Alan can keep the house of cards from collapsing until after the November election. Unless, of course, Alan has looked over the precipice and decided that Bush* has to go.

[RainDog]

7. wasn't Greenspan a deficit hawk with Clinton?

seems I remember reading that...which is pretty funny looking at Georgie's deficits-r-us administration.

except it's not funny.

I guess the rich will start to invest in things like private security and such when people are broke and can't afford the basics.

reminds me of Michael Moore's "Roger and Me," when guys who worked side by side at the GM plant turned into prisoner and jailer after GM fucked them all over.

You know, Roger and Me is one of my all time favorite Christmas movies because of the moment at the end when Roger reads Dickens to his well-heeled managers, etc, and the irony is totally lost on him that...

HE's FLYNT'S EBENEEZER!

[wunnerfulrobin]

16. Greenspan didnt bring down the market, fraud and greed did.

All the enron, global crossing, worldcom, etc stuff was going on in the 90's and no one was paying attention. Greenspan said many times that high valuations of companies with NO earnings didnt make sense. BUT, I think he raised rates 3 times too many in 2000; things had already began to slow down. The bubble had to burst sometime.

[bleedingheart]

6. subdued...ooohhh that sounds like fancy talk for - Nothing.. or Stale

hahahaha

[tjwash]

8. Not to mention that....

....after the new Bank mega-merger that just happened, and the Shady dealing that preceded it, the market is looking a little worse every day. My idea of a stable market is not consolidating most of the wealth in the country into the hands of a very select few. This type of stuff is a fascists wet dream, as it leaves itself wide open to seizures by things like hidden patriot act, or fema clauses. I would not touch the stock market with a ten foot pole.

[sal]

9. greetings

:)

[twilight]

10. smart move!

:hi: and welcome to the DU!!! :hi:

I am far away from the market myself despite money to invest. Its sitting in a CD I got a pretty good rate on last month. I think my bank knew this was coming.

Its an ugly situation when you look at the overall picture no doubt.

No jobs

Falling dollar

Never ending war(s)

Pumped up stock market (overpriced and oversold)

Lots of unemployed people

Mutual fund scandal(s)

etc. etc. etc. etc. etc. etc. !!!

OUT THE DOOR FOR YOU * IN '04!!!!

:dem: :kick:

[Voltaire99]

12. Welcome to DU

Agreed, that merger spells further weakness for democracy.

Thanks for the links.

[The_Casual_Observer]

11. Stupid fragile system

The almighty economy it built on a very weak foundation. Just hinting at a raise in the interest can cause a big panic. They are probably concerned that the stock market has gone up too high and too fast and it is time to put some reality back into the situation.

[JPace]

13. I wonder if Dean's recent criticism of Greenspan

has something to do with this. Dean said
Greenspan had become to political and
should resign.

Earth to Greenspan.....you are helping
AWOL bankrupt the nation!

[mumon]

14. Say Goodbye to America!

I heard on Kudlow & Cramer last night, a "debate" between 2 guys: a professor of economics I never heard of, and a FOREX trader. The "professor" disdained trade deficits saying "America's getting older, and so less Americans are working" (!), while the FOREX guy was saying "The falling dollar and borrowing up the yin-yang mean that America's policy's going to be dictated by those from whom it borrows."

The FOREX guy's right.

The foreign holders of dollars basically have said to Greenspan (and Treasury)," we don't want to bankroll no stinkin' wars. F* you! Raise the interest rates."

And so it will be.

[RainDog]

15. if they don't raise the interest rates

...how will they keep propping up this cardboard (box housing for the poor) economy?

since we are owned by those who buy our debt, etc. Greenspan cannot continue to grab his ankles and ask Bush how low.

I keep having this image in my mind of a Marie Antoinette moment for Bush as he demands that tax cuts be made permanant for the poor rich people who feel they are entitled to not pay any taxes.

In America, of course, it's more likely to be a Hooverville moment when Patton and MacArthur attacked WW1 vets who were simply asking to be paid what they were promised for fighting in a horrifically cruel war in which so many gave legs and arms or halves of their faces.