You mean other than the fact that the DOW sold off an additional 75 pts?
When Bernanke speaks he reminds me
- Thread starter Optionpro007
- Start date
You mean other than the fact that the DOW sold off an additional 75 pts?
Bond market is more sensitive to inflation chatter. If we're expecting the chairman to raise rates at the June 29 meeting, one would expect the long end to really sell off, right?
i think a breather is in the works...there is no reason why at this point the fed can't take a break from rate increases ...and hike again later on
I can't tell if your being sarcastic or not. I wasn't watching volume but 10 yr was fucking volitile when he spoke...bloomberg reported first w/ a definte hawkish tone to the headlines and we broke hard...then CNBC reported about 5 mins later emphasizing a few more dovish statements and we rallied. Eurodollar had shit for volume all day untill his announcement, even with ISM.
Note: not saying bloomberg or CNBC meant to put that spin on what they reported, it was just their headlines and the markets movements (interpretations?) at that time.
Agree. A month off costs them nothing.
The tenor of the statement told me to prepare for a pause.
Quote from Bitstream:
geez, u must have gotten a subliminial message somewhere...somehow
8% where we are is dangerous imo and 8.5% blows us up.
http://www.moneycafe.com/library/prime.htm
I sent chart through wire in my head to Bernanke and Maria B. Waiting to hear from the now.
Is inflation really a threat?
According to historians, stocks have in the past been a good long-term inflation hedge. That means that stock prices, when measured over periods of many years, have tended to go up faster during periods of high inflation than when inflation has been low.
The investment lesson to draw: Knee-jerk investors who sell stocks because of the threat of higher inflation therefore set up good long-term buying opportunities.
The notion that stocks are a good long-term inflation hedge is not as counter-intuitive as you might otherwise think. When inflation is high, companies are able to raise prices and hence fatten their bottom line. By the same token, when inflation is low, firms' pricing power is correspondingly low.
In this regard, I note that - just as you would expect to be the case, given rising inflation in recent months - Standard & Poor's reported in Monday's edition of its newsletter, "The Outlook," that 71% of companies are planning to raise the prices of their products. This was the finding of a survey of 200 companies' chief financial officers conducted by Baruch College's Zicklin School of Business and an organization called Financial Executives International.
Investors who sell stocks when inflation rears its head are implicitly assuming that companies have no pricing power, and hence that their earnings growth rates don't change with inflation. But history shows that this is not the case, according to a study by Harvard economists John Campbell and Tuomo Vuolteenaho. They found that real (or inflation-adjusted) earnings growth, when measured over several-year periods, was relatively constant, and that nominal earnings growth fluctuated with inflation. Study
<IMG SRC=http://www.marketwatch.com/News/Story/Image.aspx?Guid=4b6fb1e23dc64e71a7d7052d3e2706bb&Track=201>
The mistake that investors make, therefore, is extrapolating nominal earnings growth rather than real earnings growth, a species of something that economists call money illusion or inflation illusion. So when inflation starts to rise, they erroneously believe that nominal earnings will grow as slowly in a high-inflation period as when it was low. This leads in turn to the mistaken conclusion that stocks are worth less because of the higher inflation............
---------
Now time to look for companies who have the greatest pricing power.
According to historians, stocks have in the past been a good long-term inflation hedge. That means that stock prices, when measured over periods of many years, have tended to go up faster during periods of high inflation than when inflation has been low.
The investment lesson to draw: Knee-jerk investors who sell stocks because of the threat of higher inflation therefore set up good long-term buying opportunities.
The notion that stocks are a good long-term inflation hedge is not as counter-intuitive as you might otherwise think. When inflation is high, companies are able to raise prices and hence fatten their bottom line. By the same token, when inflation is low, firms' pricing power is correspondingly low.
In this regard, I note that - just as you would expect to be the case, given rising inflation in recent months - Standard & Poor's reported in Monday's edition of its newsletter, "The Outlook," that 71% of companies are planning to raise the prices of their products. This was the finding of a survey of 200 companies' chief financial officers conducted by Baruch College's Zicklin School of Business and an organization called Financial Executives International.
Investors who sell stocks when inflation rears its head are implicitly assuming that companies have no pricing power, and hence that their earnings growth rates don't change with inflation. But history shows that this is not the case, according to a study by Harvard economists John Campbell and Tuomo Vuolteenaho. They found that real (or inflation-adjusted) earnings growth, when measured over several-year periods, was relatively constant, and that nominal earnings growth fluctuated with inflation. Study
<IMG SRC=http://www.marketwatch.com/News/Story/Image.aspx?Guid=4b6fb1e23dc64e71a7d7052d3e2706bb&Track=201>
The mistake that investors make, therefore, is extrapolating nominal earnings growth rather than real earnings growth, a species of something that economists call money illusion or inflation illusion. So when inflation starts to rise, they erroneously believe that nominal earnings will grow as slowly in a high-inflation period as when it was low. This leads in turn to the mistaken conclusion that stocks are worth less because of the higher inflation............
---------
Now time to look for companies who have the greatest pricing power.