Given an economy gaining steam and a vast expansion in the money supply, it's easy to assume a wave of inflation is up next. The causes of inflation, however, are anything but straightforward -- which is something investors need to remember.
While most analysts don't expect a major departure from the December Fed meeting, the voting lineup has changed substantially. Now, Chairman Bernanke has to deal with three new members of the rate-setting committee who have expressed reservations about quantitative easing.
Although retail sales -- share prices -- have rallied back to 2007 highs, retail real estate prices remain depressed. Investors beware: A deeper look at the reasons behind that split suggest harder times ahead for major, publicly held retailing companies.
The Federal Reserve is doling out billions to buy bonds in hopes of keeping interest rates low and stimulating the economy. However, several powerful forces are working against that low-rate strategy, ranging from investor psychology to global competition for capital.
They're gearing up for a potentially damaging round of currency interventions to help keep their economies competitive, especially against China. Says Brazilian Finance Minister Guido Mantega: "This is a currency war that is turning into a trade war."
Debt and government spending are firmly at the top of the new Congress's agenda. And just the threat that the U.S. wouldn't pay its bills has traders worried and wondering if the U.S. could end up on the same chaotic economic path taken by Greece or Spain.
The U.S. economy has strengthened, but not enough for the government to pare down its bond-buying program, according to the latest Fed minutes. In late 2010, investments rose and the job market improved -- but the housing market remained depressed.
Doomsayers insist the recent rapid rise in yields means the nation's creditors are finally getting fed up with financing U.S. deficits. But a stronger argument says the cause is better-than-expected economic reports that have been piling up recently.
Republican leaders may be worried about the Federal Reserve's second round of quantitative easing, but the stock and credit markets are delighted: They've improved significantly since the plan was announced. But can the rally be solely attributed to QE2?
For the 22nd-straight month, the central bank kept its target interest rate at 0% to 0.25%. It made no new asset purchases and no changes to QE2, its $600 billion, eight-month bond-buying program. Housing and hiring are two main areas of concern in a slow-growth economy.
Silver prices touched a 30-year high Monday as investors sought the safety of precious metals. Inflation concerns are running high after Fed Chairman Ben Bernanke said the central bank is considering a third round of qualitative easing.
The former Fed chief told CNBC Friday that the Fed's policy to boost liquidity is helping stock values. "I think we are underestimating. . .how important asset prices, very specifically equity prices, are not only to shareholders but the economy as a whole," he said.
The Fed%u2019s latest Beige Book report finds that economic growth has increased but also that the economy is still growing well below its potential and too slowly to substantially lower unemployment.
No matter what Ben Bernanke actually intended, the central bank's latest push to inject money into the economy isn't resulting in a cheaper buck. And Europe's woes aren't all that's conspiring against it -- a slew of other factors are also at play.
The Fed says it expects the U.S. economy to grow weakly in both 2010 and 2011, with as many as six years needed to return unemployment to normal levels.
When the economic gurus at the Fed move the levers of U.S. monetary policy, they do so with two often-conflicting goals in mind: promoting maximum employment and keeping prices stable. Many critics are now arguing that that Fed should focus solely on prices.
Among Thursday's top stories for investors, read why managing money is hard, Mexico isn't rich, and we shouldn't fear QE2.
When QE2 is complete, the Fed's bond purchases will have injected $1.7 trillion in liquidity into the markets since 2008 in an effort to boost corporate investment in new production and new jobs in the U.S. Instead, companies are taking cash raised here and investing it in emerging markets.
ING Investment Management forecasts that stock markets will rise between 8% and 12% in 2011, thanks to a low-inflation, low-interest environment supported by the Fed, despite weak GDP growth. And for those looking for to increase their investment yields, they have a few suggestions.
Producer prices rose less than expected, with much of the hike coming from energy. Excluding food and energy, PPI fell 0.6% in the month. Overall, wholesale prices are up just 1.5% in the past year -- still too close to deflation for the U.S. Federal Reserve.
Among today's top stories for investors: Why stocks are cheap but bonds are not; could we see Dow 55,000 by 2033; and the case against QE2.
The seemingly symbiotic relationship between the China and America -- dubbed Chimerica -- is now clearly chimerical. What was once billed as the ideal partnership is quickly turning into a competition for global influence. Investors, beware.
The Federal Reserve bought $7.3 billion worth of U.S. Treasuries Friday as it started a second round of quantitative easing meant to stimulate the nation's economy, media reports indicate. The QE2 plan, designed to boost job creation and prevent deflation, has been highly criticized.
If stocks are rising, that should mean the economy is improving. Yet even though the S&P 500 has soared 80% from its March 2009 lows, 70% of Americans don't believe the recession is over. Which side has a firmer grasp of reality?
On the eve of an economic summit in South Korea, disturbing signs of discord are emerging over currency valuations and trade between the U.S. and its major trading partners. Failure to achieve an agreement could set off more "currency wars."
For a host of reasons, when the dollar spikes, stocks drop, and when the dollar falls, stocks soar. Right now, with dollar sentiment reaching maximum bearishness, contrarians are preparing for the next shift. If the dollar rises again, stocks could reverse.
