Monday Mid-Day Movers: 3 Stories Driving Markets
After trading lower early in the morning, the U.S. markets are mixed on Monday afternoon. Investors are looking forward to a speech by Federal Reserve Chairman Ben Bernanke later in the day, and five more banks to release earnings later in the week.
At 12:09 p.m.: DJIA: +0.08%, S&P 500: -0.20%, NASDAQ: -0.40%.
1) In December, the Federal Reserve committed to continue buying assets and to keep rates near zero until the U-3 unemployment rate hits 6.5 percent (currently at 7.8 percent) — as long as inflation expectations didn’t pass 2.5 percent. The inflation rate is as good a measure as any to determine if the Fed’s monetary easing policies get too hot, and a high rate could be a sign to let off the gas.
At the Asian Financial Forum in Hong Kong on Monday, Chicago Fed president Charles Evans said that “Given more explicit conditionality, markets can be more confident that we will provide the monetary accommodation necessary to close the large resource gaps that currently exist. Additionally, the public can be more certain that we will not wait too long to tighten if inflation were to become a substantial concern.”
Evans rotates into a voting spot this year, and his focus on removing uncertainty could be a boon for the markets… (Read more.)
2) “Neither the Treasury Department nor the Federal Reserve believes that the law can or should be used to facilitate the production of platinum coins for the purpose of avoiding an increase in the debt limit,” said Treasury spokesman Anthony Coley in a statement. Apparently, a $1 trillion coin is off the table and congressional leaders will have to come up with another “it’s so crazy it might work” plan to solve America’s lingering fiscal issues.
The idea of minting a coin was immediately seen as by many observers, but the fact that it was taken seriously by so many people for so long is a window into the wild circus sideshows going on up at Capitol Hill.
3) Philadelphia Federal Reserve Bank president Charles Plosser has been a long-time critic of the central Fed’s easy-money policies. Addressing a conference in New Jersey on Friday, he extended his outlook overseas, speaking to fears that when governments push down the value of their currencies — currently, through massive monetary easing policies — they run the risk of entering currency wars, which is mutually destructive.
Plosser’s comments come shortly after Japan’s new Prime Minister Shinzo Abe made a massive stimulus announcement, approving as much as $116 billion in an effort to kick start Japan’s sluggish economy.