Wednesday, August 27, 2014 08:54am
North Adams, MA now: 64 °   
Send news, tips, press releases and questions to info@iBerkshires.com
The Berkshires online guide to events, news and Berkshire County community information.
SIGN IN | REGISTER NOW   

Home About Archives RSS Feed
@theMarket: Ben Does It Again
By: Bill Schmick On: 06:16AM / Saturday April 30, 2011
Important
0
Interesting
0
Funny
0
Awesome
0
Infuriating
0
Ridiculous
0

This week's pivotal event was Fed Chairman Ben Bernanke's first press conference with the media. Judging from the price action in the stock market, Ben passed with flying colors.

The chairman provided a bit of clarity, reassuring the market that in June, when QE II expires, it will be a gradual process of monetary tightening as opposed to a sharp spike in interest rates. Clearly, he gave little comfort to the dollar bulls as the greenback continues its decline (down 8 percent year-to-date) while dashing the hopes of bears in the precious metals markets as gold and silver raced ever higher on a wave of speculative fever and inflation expectations.

Although both Bernanke and U.S. Treasury Secretary Timothy Geithner have expressed their support of a strong dollar policy, neither are doing anything to stem its fall, nor should they, in my opinion. Two years ago I predicted that the U.S. would attempt to export its way out of recession, as would the rest of the world. Judging from the recent spate of quarterly earnings results, U.S. corporations, especially multinations, are making big bucks on the back of the weakening dollar. Profits among corporations are up 26 percent from last year. This will be the seventh quarter in a row where corporations posted double-digit earnings growth.

In Europe, Germany is also benefiting from an upsurge in exports that is helping that country reduce unemployment, propel economic growth and improve corporate profits. At the same time, traditional weak currency, high exporting emerging market countries are feeling the opposite effect as their currencies strengthen, exports slow and imports climb.

Friday's revelation that GDP only grew by 1.8 percent should not have disappointed investors since just about every economist in the nation was predicting as much. Bad weather and the high prices of energy and food were blamed for the less than stellar performance. Most consider it a blip in the forecasts and growth will improve next quarter.

Despite the on-going outrage by commentators (and everyone else who has to eat and drive) about the rising prices of those two commodities, the overall core inflation rate in this country continues to remain below the Fed's targets.

"How can they just ignore gas prices or what I'm paying for meat, milk and even cereal?" demands a client and mother of three, who commutes from South Egremont to Albany every day.

The Fed argues that it cannot control the prices of food and oil, which are set on world markets and represent the totality of demand from around the globe. The central bankers contend that the recent spike in oil, for example, is transitory and will subside over time.

They have a point. Consider food and energy prices in the summer of 2008. They were at record highs only to plummet in the second half of the year. If the Fed had tightened monetary policy (by raising interest rates) in say, June 2008 at the height of the price climb for food and energy, it would have taken six to eight months before those higher rates impacted the economy. By then we were sliding into recession. Tightening would have transformed a serious recession into another Great Depression.

As for the markets, it's steady as she goes, mate, with strong earnings propelling markets closer to my first objective, S&P 500 level of 1,400. I believe we are seeing a little sector rotation going on with consumer discretionary, semiconductors and technology sectors taking a back set this week to industrials, consumer durables and precious metals. Along the way, expect pullbacks but don't be spooked by downdrafts. Take them in stride, stay invested and prosper.

Bill Schmick is an independent investor with Berkshire Money Management. (See "About" for more information.) None of the information presented in any of these articles is intended to be and should not be construed as an endorsement of BMM or a solicitation to become a client of BMM. The reader should not assume that any strategies, or specific investments discussed are employed, bought, sold or held by BMM. Direct your inquiries to Bill at (toll free) or e-mail him at wschmick@fairpoint.net. Visit www.afewdollarsmore.com for more of Bill's insights.



Tags: bears, Bernanke, QEII, export, interest rates, earnings      
News Headlines
Cheshire Police Seeking Suspect in Car Break-ins
North Adams Council Mulls Speed Limit at Mobile Home Park
Early Closing Restrictions Lifted for Pittsfield Bar
National Weather Service Transmitter Slated to Return Oct. 1
Lanesborough Administrator Wants More Resources For Road Drainage
Pittsfield Community Meeting Looks At Local Youth Violence
Greylock Community Club Wins in Torchia League Playoffs
Pittsfield: Veterans Agent Fired
Western Summit Gift Shop Reopens on Mohawk Trail
Adams-Cheshire Has New Administrators, Programs
Bill Schmick is registered as an investment advisor representative and portfolio manager with Berkshire Money Management (BMM), managing over $200 million for investors in the Berkshires. Bill’s forecasts and opinions are purely his own and do not necessarily represent the views of BMM. None of his commentary is or should be considered investment advice. Anyone seeking individualized investment advice should contact a qualified investment adviser. None of the information presented in this article is intended to be and should not be construed as an endorsement of BMM or a solicitation to become a client of BMM. The reader should not assume that any strategies, or specific investments discussed are employed, bought, sold or held by BMM. Direct your inquiries to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com Visit www.afewdollarsmore.com for more of Bill’s insights.

 

 

 



Categories:
@theMarket (142)
Independent Investor (193)
Archives:
August 2014 (5)
August 2013 (2)
July 2014 (2)
June 2014 (6)
May 2014 (9)
April 2014 (8)
March 2014 (6)
February 2014 (6)
January 2014 (7)
December 2013 (8)
November 2013 (7)
October 2013 (6)
September 2013 (6)
Tags:
Japan Deficit Rally Markets Stocks Housing Federal Reserve Debt Ceiling Euro Fed Banks Commodities Currency Fiscal Cliff Oil Stock Market Retirement Metals Debt Greece Selloff Bailout Energy Crisis Stimulus Jobs Pullback Taxes Interest Rates Election Recession Congress Economy Europe Europe
Popular Entries:
The Independent Investor: Understanding the Foreclosure Scandal
The Independent Investor: Don't Fight the Fed
The Independent Investor: Does Cash Mean Currencies?
@theMarket: QE II Supports the Markets
@theMarket: Markets Are Going Higher
The Independent Investor: General Motors — Back to the Future
The Independent Investor: How Will Wall Street II Play on Main Street?
The Independent Investor: Will the Municipal Bond Massacre Continue?
@theMarket: Economy Sputters, Stocks Stutter
The Independent Investor: Why Are Interest Rates Rising?
Recent Entries:
@theMarket: Labor on Their Mind
The Independent Investor: Financing ISIS
@theMarket: Geopolitical Risk Trumps Economic Growth
The Independent Investor: Beware the Russian Bear
The Independent Investor: Why Some Corporations Are Leaving America
The Independent Investor: How Much Is Too Much to Spend in Retirement?
The Independent Investor: The Fed Turns Off the Spigot
The Independent Investor: Should You Pay Off Mortgage Before Retiring?
The Independent Investor: Retirement should be a part-time job
The Independent Investor: Unhappily Ever After


View All
Western Mass Beer Fest 2014
Hundreds turned out for the 9th annual Western Mass Beer...
High School Soccer
High School soccer practice got under way on Thursday.
Motorama
Hundreds of cars, trucks, motorcycles, snowmobiles and...
Chamber Nite @MountainOne
A who's who was at the MountainOne-hosted Berkshire Chamber...
Third Thursday Aug. 21, 2014
The August Third Thursday event in Pittsfield included a...
High School Football
High School football practice got under way on Monday.
Giorgi League Semis: B&B vs...
Burr and Burton held a steady lead over Bennington, Vt.'s,...
Giorgi League Semis: Drury vs...
Alex Heck scored 19 points to lead the Drury boys...
Mill Children Opening
The 5 Hoosac Street Gallery held its grand opening Friday...
Downtown Celebration 2014
North Adams held its annual street fair on Main Street on...
Worcester Bravehearts vs...
Key at bat helps the Worcester Bravehearts defeat the...
9th Annual Rock, Rattle &...
This year's theme is "Living in Harmony, Fulfilling Our...
Softball Series: Berkshire...
Lanesborough Block Party 2014
The 6th annual Lanesborough Firemen's Association Block...
Softball Series: Berkshire...
The Berkshire Force played in its 14th and final game...
Softball Series: Berkshire...
The Berkshire Force wins one of two games Monday morning to...
Western Mass Beer Fest 2014
Hundreds turned out for the 9th annual Western Mass Beer...
High School Soccer
High School soccer practice got under way on Thursday.
Motorama
Hundreds of cars, trucks, motorcycles, snowmobiles and...
Chamber Nite @MountainOne
A who's who was at the MountainOne-hosted Berkshire Chamber...
Third Thursday Aug. 21, 2014
The August Third Thursday event in Pittsfield included a...
| Home | A & E | Business | Community News | Dining | Real Estate | Schools | Sports & Outdoors | Berkshires Weather | Weddings
Advertise | Recommend This Page | Help Contact Us | Privacy Policy| User Agreement
iBerkshires.com is owned and operated by: Boxcar Media 102 Main Street, North Adams, MA 01247 -- T. 413-663-3384 F.413-664-4251
© 2000 Boxcar Media LLC - All rights reserved