Federal Reserve

5 Things That Made Us Go Hmmm

September 23, 2014

In the early 90’s, late night television show host Arsenio Hall had a segment where he would ponder strange, usually satirical, thoughts by referring to them as “things that make you go hmmm.” Last week was full of things that made us go hmmm. Let’s look at five of them: (more…)

Time Will Tell on Apple and Interest Rates

September 16, 2014

Last week, Apple, Inc. was able to capture the media’s attention for most of the week with its major product release event. At previous events, Steve Jobs was famous for using the line, “one more thing,” to let all the Apple fans know that they had something new and exciting to release. That line was used for the first time since Steve Jobs’ death to announce the new Apple Watch. While many in the room expected the announcement (as the largest company in the U.S. by market capitalization it is hard to keep secrets), it was a venture into something new and different for Apple.

In addition to the Apple Watch, two new versions of the iPhone were unveiled (both with larger display screens than the current version) and a new pay with your phone feature called, Apple Pay. Apple Pay goes a long way towards addressing the security issues that have embarrassed many of the major retailers over the past couple of years by incorporating some of the more advanced security technology into a phone. (more…)

Pipe Shots and Curve Balls

July 21, 2014

Fans of baseball know that the season is at the halfway point when we reach the All-Star game. The game was played last Wednesday and the American League beat the National League. During the game, Derek Jeter of the New York Yankee’s was given a “pipe shot” which he turned into a double during his first at bat. A pipe shot is a pitch that is thrown down the pipe, or the hitting sweet spot. It was essentially a kind gesture from a gifted pitcher to a retiring legend.

Taking the pipe shot to finance, we see that the Federal Reserve has been throwing their version of pipe shots to banks and investors for some time. The latest was their recent announcement regarding the Fed’s bond buying program known as quantitative easing (i.e., QE3). The Fed has now publically stated that the program will end following its October meeting. (more…)

Taking the Other Side

February 11, 2014

Every January, investors are bombarded with numerous references to “the January effect.” We too have covered that topic on numerous occasions, and our general take is we hope the January effect plays out, but we don’t put any real faith in the indicator. This year, we change our tune a bit. In 2014, we hope that it doesn’t play out, yet we still don’t put any real faith in it.

As you may recall, the January indicator simply states that if the market closes up in the month of January, there is a high historical probability that it will finish the full year with gains. Taken at face value, the indicator has worked pretty well. According to the Stock Trader’s Almanac, since 1950, this indicator has an 88.7% success rate. That’s pretty good. Since this January produced losses in the markets, we should sell all of our stocks and head for the hills, right? (more…)

HFG Perspectives: February

February 5, 2014

We all know by now that bull markets tend to take a few steps forward and then give a bit back. While it’s never enjoyable to watch our account balances decline over the shorter term, stock markets gave back a bit in January. While the talking heads on TV might attempt to make us think that the next crisis is at our doorstep—that’s just how the media business works—the decline we’ve been witnessing for the last month has been, if anything, average. (more…)

HFG Perspectives – October

October 3, 2013

Nothing happened on the policy front in September, and markets seemed to think that was just fine. There were two major government actions that investors were looking forward to seeing resolved in the month, and as has too often been the case in Washington, nothing at all was resolved.

The first issue was the Federal Reserve’s expected taper of quantitative easing. Though economists widely expected the Fed to announce that it was going to begin to reign in its unprecedented monetary stimulus program, it didn’t. With subpar economic growth, low inflation and slower than hoped for improvement in the labor market, the Fed decided that the current level of stimulus was still needed. U.S. markets rallied strongly. Broad international and emerging markets were even stronger. (more…)


September 24, 2013

“To me, consensus seems to be the process of abandoning all beliefs, principles, values and policies. So it is something in which no one believes and to which no one objects; the process of avoiding the very issues that have to be solved, merely because you cannot get agreement on the way ahead. What great cause would have been fought and won under the banner: ‘I stand for consensus?”
~Margaret Thatcher.

Last Monday, it seemed that everyone knew that the Federal Reserve would be tapering their Q.E. program. Economists knew it. CNBC knew it. Your neighbor probably knew it too. If you’ve been reading our weekly missives over the last few months, you know that we were not with the consensus.

In 2005 everyone knew that you had to buy a house before you “missed out,” whatever “missed out” meant. In 1999, everyone knew that the internet economy would cause America to boom for years and years. A thousand years ago, many world leaders and the populace that trusted them knew that the Earth was flat. (more…)