Money Minute: Fed Sets End Date for Bond-Buying Stimulus
The Federal Reserve's controversial bond buying program also known as "quantitative easing" is gearing up for its finale.
The Federal Reserve began buying Treasuries and other securities in 2008 at the height of the financial crisis in a bid to stimulate the economy. The decision has substantially inflated the Fed's balance sheet.
Whether it was the right course of action is the topic of much debate but for the first time the Central Bank has pinpointed its exit date: as of November the Fed will no longer be buying bonds. The announcement signals more confidence in the economy as the unemployment rate has fallen and inflation remains low. Now the focus is on when the Fed plans on raising interest rates and the timing of that will likely have a huge impact on financial markets.
Here on Wall Street on Wednesday, the major indexes bounced back after their steepest two-day sell-off since May. The Dow Jones industrial average (^DJI) gained 78 points, the Nasdaq composite (^IXIC) picked up 27 points and Standard & Poor's 500 index (^GPSC) rose 9 points.
Foreign banks are under the microscope right now following BNP Paribas's record $8.9 billion settlement for violating U.S. sanction laws. Federal agencies are ramping up their investigations of at least six other banks in Germany, France, Italy and Japan to see whether they have processed transactions for sanctioned countries through their U.S. divisions. If they are found guilty they could face steep fines and risk being cut off from the U.S. financial system, which would be detrimental to their businesses.
The saga at American Apparel (APP) seems to have come to an end -- for now, at least. After ousting CEO Dov Charney three weeks ago a lender called in its $10 million loan and the stock was badly beaten. But now the former CEO, the board and a major investor, Standard General, have come to an agreement. Standard General is injecting $25 million into the company, the board will be remade and they are committed to keeping manufacturing in the U.S. -- a major part of the company's branding. Questions still remain over the fate of the company and its former CEO, who wants to be back in the driver's seat, but at least for now American Apparel has been giving a shot at turning itself around.
And finally, Sunday marks the end of World Cup as Argentina faces off with Germany. If you're thinking of jetting down to Rio to catch the game, you'd better bring a giant bag of money with you. Tickets distributed by FIFA are sold out but on the secondary markets you're looking at a price tag of anywhere from $5,000 to $20,000 dollars if you go through ticket resellers. On eBay (EBAY) there are tickets with an opening bid for $3,000 to $12,000 but they could go much higher. That's a major markup as the tickets FIFA sold have a face value of $440 to $990. And be careful where you buy your tickets from. Scalping is illegal in Brazil, and you are vulnerable to fakes should you buy them from an unknown entity.
-Produced by Karina Huber.
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