Stocks received an unexpected boost late last week as China announced a reduction in benchmark interest rates and signaled that its government was ready to adopt a more accommodative stance to prevent an excessive slowdown. The People’s Bank of China cut the one-year deposit rate by 0.25 percentage point to 2.75 percent, and lowered the one-year lending rate from 6 percent to 5.6 percent. This was China’s first rate reduction in more than two years. Read more about China Starts to Ease 11-25-14
Yesterday, the People’s Bank of China raised the reference rate, known as the central parity rate, for the yuan (aka the renminbi) by the most in the last four years, in an apparent move to support the currency in light of weakness in the yen after the Bank of Japan expanded its asset-purchase program to an unprecedented level. The yen is one of the currencies, along with the U.S. dollar, the euro, and others in a basket against which China pegs the renminbi. On a daily basis, the PBOC sets a parity rate and allows the yuan to trade within a fixed range of it. Read more about Riding China's Rise 11-11-14
Coming off two very strong weeks that took both the S&P 500 and Dow Jones Industrial Average to new record highs, U.S. stocks took a breather today as a poor growth forecast reminded investors that all’s not well across the Atlantic. Read more about A Breather After New Highs 11-4-14
The Federal Open Market Committee, the Fed’s policy-setting board, meets this week and will announce its latest policy decision tomorrow afternoon. Observers widely expect Janet Yellen and company to announce the end of the latest iteration of the Fed asset purchase program (aka QE3). Increased market volatility in recent weeks, however, alongside the strong dollar, and uncertainty over global economic stability and the possible impact on the U.S. recovery, had sparked speculation that the end of QE may be delayed. Fed officials have publicly acknowledged the possibility. Read more about The Fed to Keep the Reins Loose 10-28-14
We take a look at the latest readings from our indicators and what they are saying about the recent turmoil. We argue why, despite numerous overseas risks, a major market collapse is unlikely.
We also examine the steep drop in oil prices and the future implications for the world and our Core ETF portfolio. Read more about A Look at Oil's Decline and Its Implications
Though it failed to hold most of its early gains, the U.S. market ended a losing streak today, after the biggest three-day selloff since 2011 saw the S&P 500 fall nearly 5 percent since last Thursday. The early third-quarter results for the companies that have reported have been generally good. As of this writing, of the 34 S&P 500 companies who have reported, 25 (73 percent) beat expectations while 24 (70 percent) beat on sales, suggesting that overall quarterly corporate results should be along historical norms. Read more about Be Alert but Don't Panic 10-14-14
The International Monetary Fund (IMF) released a somber quarterly World Economic Outlook report today, highlighting growth concerns worldwide. With a penchant for overly optimistic predictions, not surprisingly it has once again had to revise downward its previous growth projection (for the ninth time in the last three years). The IMF now forecasts 2014 global growth of 3.3 percent. Previously, in July, the organization had predicted 3.4 percent growth, and before that, in April, 3.7 percent. The IMF also cut its 2015 growth outlook to 3.8 percent from 4 percent. Read more about The IMF Cuts Again 10-07-14