Speculation is that the U.S. Federal Reserve will support the economy.
From Bloomberg:
S&P 500 futures expiring in September gained 0.4 percent to 1,128.60 as of 11:21 a.m. in
Tokyo
. The contract earlier fell as much as 1 percent. The U.S. equity benchmark plunged 4.7 percent to 1,123.53 last week, giving it a 16 percent loss since July 22.
“We’re at a point where the alarm bells are sounding,” Nick Maroutsos, a Sydney-based money manager who oversees the equivalent of about $4 billion at Kapstream Capital, said in a Bloomberg Television interview. “There needs to be a stop gap put in the market, so that people can have some sort of confidence that the Fed officials, as well as government officials, are standing by their side to help them through this.”
His view is not so negative. He said Global stock markets are “bouncing along the bottom” after tumbling 16 percent in the past four weeks.
Good news, they will start to gain as inflation accelerates, said Templeton Asset Management’s
Mark Mobius
.
The Fed hasn’t given up supporting the economy by printing money and buying more Treasuries, said Mobius, the executive chairman of Templeton Asset’s emerging markets group.
U.S. stocks are up. the Dow is up 142 points at this moment : 10 pm Monday night in SG.
Expected the rebound after a terrible four-week drop.
Speculation now is that the Fed
will take steps to stimulate the world’s largest economy. Of course la! They are paid to do something. And these are the smartest finance brains in the West.
Tonight, central bankers and economists will be gathering in Jackson Hole, Wyoming, for the Federal Reserve’s annual gathering. Throughout the week, analysts have been debating whether Bernanke will be announcing another round of stimulus (QE3) in his speech. Given the negative sentiments on Fed’s balance sheet size, the move could be highly controversial.
What is our current status?
Despite the rally earlier this week, the Dow is still down 8.1% in August. The unemployment rate was stubbornly high at 9.1% last month and initial jobless claims surged to 412,000. Last week, the Philadelphia Fed index shocked the markets with a negative 30.7 reading, the lowest since March 2009 when the U.S. was still in recession.
On the bright side, the durable goods orders in July rose 4% on strong aircraft and automobiles demand. The U.S. Conference Board leading indicator index July figures also showed an improvement from June.
Flipping the coin
According to Sydney Morning Herald yesterday, Macquarie Private Wealth Advisor Martin Lakos said there was a 50-50 chance the Fed would do nothing tonight.
''This volatility is just going to continue. It's not all over yet with the European debt crisis… We really need to be getting some signals that there is more action planned rather than a steady-as-she-goes type of rhetoric.'' Mr Lakos said.
I believe Ben will hint but he will probably not said much about QE3.
I am worried about the current situation. The worst scenario is that we could face a currency war with investors losing faith in USD. That would be a disaster.
