Grumpy Editor

Confusion reigns as Fed interest rate decision nears

 

Grumpy Editor notes confusion prevails as financial eyes focus on Thursday’s Federal Reserve policy meeting that will determine whether or not there will be an interest rate rise from zero to 0.25 percent.

Chatter on the slim increase has been going on for months.  Constant mentions of a possible boost have sent the stock market down, while mentions of a delay in the raise have sent the market up.

Consider these contrasting headlines in print over the weekend:

Fed Expected to Order Interest Rate Increase was over a Reuters report.  (“A Reuters poll of 72 economists showed a slight majority expect an interest rate rise”…at this week’s policy meeting.

Economists See Fed Waiting on Rate Hike topped a Wall Street Journal story.  (It cited, “most private economists think the Federal Reserve will keep short-term interest rates near zero this coming week.’)

If there is no upward interest rate move announced following Thursday’s meeting, then look for continued market gyrations leading up to the Fed meeting in October, then if no action, December.

Among operations rocking and rolling with rate discussions in recent months were publicly-owned real estate investment trusts (REITs), which own or finance income-producing real estate such as office buildings, shopping malls and medical facilities.

The Wall Street Journal last week pointed out that category was “lagging behind the broader market this year amid concerns that REIT stocks will suffer if the Federal Reserve raises interest rates.”

Confusion there, too.

The National Association of Real Estate Investment Trusts (NAREIT) website noted, “the historical record reveals that share prices of listed equity REITs have more often increased than decreased during periods of rising interest rates.”

 

In case you missed these…

There’s that “domesticated” word again, regarding inflation.  An Associated Press economics writer on Friday wrote:  “The prices charged by U.S. manufacturers, farmers and other producers were unchanged in August, the latest evidence that inflation is tame.”

Weak data from China triggers U.S. stock market rise.  Head-scratching routine as with last Tuesday’s market:  U.S. stocks opened sharply higher after weak economic data out of China bolstered hopes of more stimulus measures from the Chinese government.

Problems continue with sloppy VA attention to veterans.  Associated Press reported nearly 900,000 military veterans have officially pending applications for health care from the Department of Veterans Affairs, but "serious" problems with enrollment data make it impossible to determine how many veterans were actively seeking VA health care.  Officials said some applicants may have died years ago.

What most media missed:  While President Barack Obama was emphasizing climate change during his recent Alaska visit, a U.S. submarine was having difficulty poking through 30 feet of Arctic ice.

More media folks clear out desks.  Bloomberg’s news division began September by cutting up to 90 editorial jobs.  In other trimming action, Tribune Publishing Co., unexpectedly axed Los Angeles Times publisher Austin Beutner and replaced him with Tim Ryan, publisher of the Baltimore Sun, also owned by Chicago-based Tribune.  Insiders expected another round of buyout offers to veteran Times newsroom staffers.

Incomplete details:  A CBS radio top-of-the-hour news item on Friday merely mentioned a shooting at a Downey, Calif., restaurant, without disclosing the name of the eatery or even the type of food --- and what led up to the episode.  Turns out a man carjacked a sedan at gunpoint, led police on a high-speed chase through several Los Angeles County cities before he holed up in a Chris & Pitts BBQ restaurant where he was killed by sheriff’s deputies when he approached customers with a gun.

 

Young journalist produces monthly newspaper ---

Eight-year-old Hilde Lysiak, for nine months now, writes, takes photos and delivers the four-page Orange Street News to more than 50 subscribers (at $2 a year) in her community of Selinsgrove, Pa.

She told the New York Daily News, “I really like getting to the truth and reporting it.”

 

2015 FOMC meetings slated to get wide attention

 

Many, from consumers to investment firms, will be seeking clues in coming months on what lies ahead in 2015 interest rates, which are likely to be raised for the first time in nine years, notes Grumpy Editor.

The question is when. 

Some Federal Open Market Committee (FOMC) followers see an increase coming as soon as April (at 2015’s third FOMC meeting. See table, below) as economists expect the economy to rise 2.9 percent in the months ahead. 

Meanwhile, investors, market analysts, economists and business writers will be seeking clues, including wording in statements following some FOMC meetings.

Any change in the federal funds rate triggers a chain of events that affect short-term interest rates, long-term interest rates, foreign exchange rates, the amount of money and credit, and, ultimately, a range of economic variables. 

That includes employment, output, prices of goods and services plus, of course, the stock market direction.

2015 FOMC meetings:

January       27-28

March          17-18*

April            28-29

June             16-17*

July              28-29

September  16-17*

October       27-28

December   15-16*

* Meeting associated with a Summary of Economic Projections and a press conference by chairwoman Janet Yellen. 

 

FYI, IN CASE YOUR FAVORITE EDITORS MISSED THESE…

 

Former Arkansas Gov. Mike Huckabee helmed his final weekly commentary show, “Huckabee,” on Saturday after six-and-a-half-years on Fox News Channel to explore a presidential run. “It’s been the ride of a lifetime and I have never had so much fun in my life,” he declared.  He asked his fans to “stay tuned” to learn about his next move which will be determined in the spring.  He previously ran for the Republican presidential nomination and won the 2008 Republican Iowa caucus before withdrawing...In wrapping up a vacation in Hawaii, President Barack Obama and wife Michelle on New Year’s Day spent three hours enjoying multi-course meals at Honolulu’s upscale Vintage Cave restaurant where dinner for two can run upwards of $1,000, tallies Honolulu Magazine…Military budget cuts a factor?  Media didn't ask why missing from the 2015 Rose Parade on New Year's Day in Pasadena were Army, Navy and Air Force bands --- included in prior parades.  But the Marine Corps was in the lineup…The monthly SF Evergreen, for cannabis industry and culture followers, debuts Jan. 26, free at San Francisco newsstands.  “What we hope is an upper class, sort-of GQ or Vanity Fair for the marijuana scene in the Bay Area,” editor Chris Roberts told KCBS, San Francisco…In a new advertising program, beer drinkers soon will see more than 100 different messages on Bud Light bottles...Lake Superior State University’s 40^th annual banished words list included polar vortex used in place of good old winter or cold snap and foodie for a person who likes food. Hey, that’s everyone…With a lot of dopey movies released in 2014, ticket sales fell 5.2 percent to $10.3 billion in the U.S., while attendance dropped an estimated 6 percent to 1.26 billion --- lowest in nearly two decades…A new California law, pushed by animal rights folks, requires farmers selling eggs in California to house their hens in larger structures.  The move could see egg prices jump 40 percent in the Golden State…PR Week reported a survey found more public relations firms are offering the ability to work from home, with 90.5 percent of respondents saying they can…A mystery grenade that washed ashore on California’s Malibu beach received wide broadcast/print coverage.  Media reported a sheriff’s arson/explosives detail arrived and rendered the device safe and took it away --- but no reporter asked about the device’s country of origin.

 

 

Oops!  HarperCollins, in selling an atlas specifically for Middle East schools, left out Israel.  The publisher last week said it regrets omission of that country and has removed the product.

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As Fed chairman Bernanke speaks to media, Dow ebbs

As often happens, when Federal Reserve Chairman Ben Bernanke speaks, the stock market drifts south, as happened yesterday when he faced the business press following the year’s last meeting of the Federal Open Market Committee, observed Grumpy Editor. 

The Dow Jones Industrial Average erased an 81-point rally earlier in the day to close down 2.99 points at 13,245.45. 

It marked the end of a five-day rally. 

Bernanke spoke 12 minutes following the FOMC meeting, then went into detailed answers to media questions for an hour. 

The Q&A session started with the Dow up 42 points.  The average drifted lower as the questions continued seeking input on the central bank’s policy and what lies ahead.  

Also in the air was uncertainly, along with worries, on the looming “fiscal cliff.” 

As for inflation, Bernanke said it “remains well-controlled.” 

He added the Fed plans to keep key short-term rates near zero until the unemployment rate --- which he sees elevated until late 2015 --- reaches 6.5 percent or less, down from the current 7.7 percent.

Fed words, fiscal cliff, sales, prices point to jitters

In efforts to snatch a clue on what lies ahead financialwise, many investors, market observers, economists --- and business writers --- will be keeping ears zeroed in on what Federal Reserve Chairman Ben Bernanke has to say during a news conference at the conclusion of today’s last 2012 Federal Open Market Committee meeting, reminds Grumpy Editor. 

Words will be scrutinized in attempts to sniff out any indication of coming interest rates, near zero for several years. 

A stock market reaction likely will follow, sometime after 2:15 p.m., Eastern. 

Any change in the federal funds rate is destined to trigger a chain of events that affect short-term interest rates, long-term interest rates, foreign exchange rates, the amount of money and credit, and, ultimately, a range of economic variables.

Along with the stock market direction, that includes employment, manufacturing output plus prices of goods and services. 

Also closely watched today will be any development on the “fiscal cliff” out of Washington. 

It all points to what could be a turbulent next two days. 

Due out tomorrow are retail sales and producer prices for November along with the latest week’s initial jobless claims figures. 

On Friday, industrial production for November and the consumer price index are released.