Money Minute: Fed Sets End Date for Bond-Buying Stimulus

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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.

Economy Yellen
J. Scott Applewhite/APFederal Reserve Chair Janet Yellen
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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39 Comments

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weilunion

It is all lies, people no matter what the troll, Dopey will tell you. Unemployment is up, not down. Crime is up, not down. Confidence is down, not up.

Sound like Alice in Wonderland? It is.

July 10 2014 at 10:34 PM Report abuse rate up rate down Reply
ted_wilson7

h.ecdag
Hey Goofus. In case you were wondering....I'M LOVING the new ride. Just dropped it off today for tint and Xpel. ****** You have to pay extra for that ??? lmao

July 10 2014 at 4:47 PM Report abuse -3 rate up rate down Reply
1 reply to ted_wilson7's comment
h.ecdag

Yep. Xpel isn't included on any car I know of, and as far as the tint goes, let's just say I went with legal "plus". The dealership gave me a credit, and had me pay the shop directly.

Don't write stupid posts. You only embarrass yourself.

July 10 2014 at 6:15 PM Report abuse rate up rate down Reply
1 reply to h.ecdag's comment
ted_wilson7

legal "plus".****** Yeah, you should stay out of sight. AND OUT OF MIND as much as possible……
When I write " stupid posts", it's only in response to your " stupider " post…. Hope your Kraut Wagon gets keyed soon, so you can get over it quick.

July 10 2014 at 10:16 PM Report abuse rate up rate down
.kowalski440mag

What federal law(or otherwise) gives the fed the ability to create paper or electronic money which they then use to purchase debt? The constitution gives 'Congress' that responsibility.

July 10 2014 at 4:23 PM Report abuse -1 rate up rate down Reply
1 reply to .kowalski440mag's comment
clark8642

And Congress gave that power to the Fed when it passed the Federal Reserve Act. And Congress, for whom the Fed works, can always change that.

July 10 2014 at 4:25 PM Report abuse +1 rate up rate down Reply
2 replies to clark8642's comment
clark8642

Backed by gold? Yes and silver. And by debt instruments of the federal government, as it is today. The conduct of monetary policy affects the amount of money. Pick any year you want and look at the Fed's Annual Report to the Congress to look at the data on money supply and the Fed's balance sheet.

July 10 2014 at 4:56 PM Report abuse rate up rate down
clark8642

440 asked what law gave the Fed the power to create ( and destroy) money and I answered his question. I suspect he does not realize that the Fed is a creation of the Congress specifically tasked to carry out a function assigned to the Congress by the Constitution.

July 10 2014 at 7:47 PM Report abuse rate up rate down
Valerie

Look at the expression on Yellen's face in the photo. "OMG!!! The sky is falling!!!" LOL

July 10 2014 at 4:19 PM Report abuse -1 rate up rate down Reply
thefacts22

The Feds policies are not helping anyone but "WS cronies",what we need is to get rid of this Regime and elect some one that understands economy and not ever anymore a community organizer clown

July 10 2014 at 3:59 PM Report abuse +1 rate up rate down Reply
1 reply to thefacts22's comment
clark8642

The regime in place in 2008 did much better. Wait a minute. Maybe not? maybe this administration has done better?

July 10 2014 at 4:26 PM Report abuse rate up rate down Reply
4 replies to clark8642's comment
jim.lapt

I don't care what the fed does. My hubby picked up our new A6, and the neighbors are all gawking out their windows. Now they are really jealous.

July 10 2014 at 2:12 PM Report abuse -5 rate up rate down Reply
1 reply to jim.lapt's comment
h.ecdag

It's pretty nice, isn't it? Have to get used to the ACC and lane assist, but I like it.

July 10 2014 at 4:19 PM Report abuse +2 rate up rate down Reply
Iselin007

Keep spinning the economy "FAIL"

The reason for the low participation rate is there are just too many people looking for work and the employers don't have the staff to review the flood of digital applications so the applicants aren't recorded.

For crying out loud each potential candidate thats selected for just a crap job has to go through a gauntlet of interviewers, many of them idiots themselves with personal bias and no clue of what their doing!
Look at the data folk: After several years of sluggish growth even when hiring picked up the Non institutional labor force 16 and over was growing and piling up. Even as the employment peaked the unemployed was piling up.

Now you got 92.1 million waiting on the bench " not in the labor force" but 6,115,000 discouraged people wanting jobs! then there is the unemployed of over 9 million.
Look at the previous data for June 2007 you'll see the no in the labor force wasn't as big as it is now. These people are age 16 and over not retirees as some mindless idiots would like to claim.

July 10 2014 at 12:13 PM Report abuse -2 rate up rate down Reply
1 reply to Iselin007's comment
weilunion

There is no work but slave labor for debt

July 10 2014 at 10:38 PM Report abuse rate up rate down Reply
tmlbtb

So shortly after that will we have another earth shattering recession? And yes, both sides of the aisle are the problem. We have a do-nothing leader-ship all thru out D.C. It's built into the system and the system is busted. But the lobbyists are still running to their banks.

July 10 2014 at 12:01 PM Report abuse +1 rate up rate down Reply
Iselin007

The taper should be quite interesting, there are many for sale signs up. Once the rates begin their climb existing housing stock in NJ will begin to pile up as potential buyers not flippers hold out for the lowest price. Some home owners got tiring of waiting, they got the moving van an said lets get the "" out of here.

The states budget problems are an added negative. A delay in the pensions approved, rebates 21 months out still stalled. Crap jobs still the main source of employment unless you on an H1B visa! Top billing in the claims out of 50 states for the week ending June 28th 2014.

July 10 2014 at 11:44 AM Report abuse -2 rate up rate down Reply
Iselin007

true.liberal
Probably Martian invaders that hide under your bed all day, only to emerge at night, riding on the backs of flying pigs to terrorize you under the cover of darkness.

Then again, maybe your confusion stems from the perpetual darkness in which you reside.
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The only thing perpetual is the decline of the middle class and the increase in the not in the labor force.

I don't confine myself to a party, there are jerks in every lot. If you trust the BLS reports then just review previous months and years to see where your celebration ends and eating crow begins.

July 10 2014 at 11:30 AM Report abuse -2 rate up rate down Reply