Wednesday, April 23, 2014
FAIRFIELD-SUISUN, CALIFORNIA
99 CENTS

Eyes of Wall Street turn to Fed meet

stevenson column sig

By
From page C1 | December 15, 2013 | Leave Comment

Wednesday could be a big day for investors. Or maybe not. But the focus in the Wall Street world will be on the meeting of the Federal Reserve Open Market Committee.

This group of seven members of the Fed’s board of governors meets eight times a year to look at the economy and make decisions on interest rates. It’s a two-day meeting and, in anticipation, investors often get nervous.

For almost two years, the Fed has kept the discount rate low – very low – to ease the economy out of recession. The discount rate is the interest rate that banks charge one another on what are known as overnight loans. It’s a short-term rate, but it can affect other rates and, indeed, the entire economy.

Ben Bernanke, the outgoing chairman of the Fed, has said that it will not consider raising rates until unemployment falls below 6.5 percent. But Bernanke, and other members of the Fed, may be having second thoughts about the target jobless rate for putting on the brakes.

The Fed slows down the economy by making “overnight” bank loans more expensive, and therefore, a drag on economic activity. So why would Fed officials want to slow things down?

If we had to choose one word that has been the Fed’s focus for many years, it’s inflation. Inflation usually goes up along with economic activity, as, in the traditional definition, too much money is chasing too few goods.

Actually, if anything, the opposite has been true, which means that for the first time in many years, the worry might be about deflation. Deflation is a trend of falling prices, which might be good for the consumer, but wreaks havoc on corporate balance sheets. That is what has happened in Japan and, as a result, their stock market, as represented by the Nikkei average, has lost more than half its value in the past three decades.

Interesting, isn’t it, that so many highly paid market observers have been more worried about inflation over the years and thus have missed the underlying movement of prices.

The analysts are not alone in having, as The Wall Street Journal points out, egg on their faces. You can count on one hand – well, maybe two – the number of million-dollar stock analysts who predicted deflation a year ago. One of the chief measures of inflation, of course, is the price of gold, which has been falling all year. In addition, as many of you are aware, residential real estate prices seem to have ended their multiple-year climb. For years, as home prices increased, we heard that the price rise was going to be with us for the indefinite future.

What we have learned from the fall in gold, the stagnation of residential property prices and the rise of the stock market is that these markets, and, indeed, the entire economy, can be almost impossible to predict consistently.

As I’ve mentioned from time to time, I can challenge anyone to tell us the name of anyone who was absolutely reliable when it comes to market predictions. That doesn’t mean that there aren’t a lot of economists and market analysts who have a much-greater understanding of the markets than most of us do. But just watch out for those radio and TV commercials that promise silver will double in a year or two.

Stick to something more reliable, like betting on football games. For just $100 a year, I’ll send you a guaranteed list of winners in the NFL. After their games are over, of course.

Bud Stevenson, a retired stockbroker, lives in Fairfield. Reach him at Bsteven254@aol.com.

LEAVE A COMMENT

Discussion | No comments

The Daily Republic does not necessarily condone the comments here, nor does it review every post. Read our full policy

.

Solano News

 
Delta barriers no longer needed

By Barry Eberling | From Page: A1

 
Supervisors voice concern on state Delta plans

By Barry Eberling | From Page: A1 | Gallery

 
Rotarians talk about running clinic to help Haitians

By Ian Thompson | From Page: A3 | Gallery

 
Dental clinic coming Friday, Saturday

By Barry Eberling | From Page: A3, 5 Comments

 
Fairfield-Suisun Sewer District eyes new auditor

By Ryan McCarthy | From Page: A4

 
County honors Purple Heart recipients

By Barry Eberling | From Page: A6

 
Solano recognizes 1,300-strong volunteer corps

By Barry Eberling | From Page: A6

 
Kids fishing derby in Fairfield is part of Earth Day

By Ryan McCarthy | From Page: A7

 
Garamendi to host open house at Fairfield office

By Ryan McCarthy | From Page: A7

 
Highway 12 night work scheduled in Delta

By Barry Eberling | From Page: A7

 
County approves Icon agreements

By Barry Eberling | From Page: B9

 
Ceremony set to break ground for Suisun City Walmart

By Amy Maginnis-Honey | From Page: B9, 19 Comments | Gallery

Dutch Bros. opening with free drinks

By Barry Eberling | From Page: B9, 8 Comments

 
Museum readies to host Sallie Fox Day in Vacaville

By Amy Maginnis-Honey | From Page: A10, 1 Comment

Golf tournament to raise funds for children

By Barry Eberling | From Page: A10, 1 Comment

 
Mustangs and More event moved back to October

By Ian Thompson | From Page: A10

Rotary club to host clay shooting derby

By Susan Winlow | From Page: A11

 
Ghost Walk returns to Suisun City

By Amy Maginnis-Honey | From Page: A11

Penalty decision looms in Winters homicide case

By Lauren Keene | From Page: A11

 
NAMI talk on reducing mental health stigma

By Barry Eberling | From Page: A11

 
.

US / World

In Internet TV case, justices show concern

By The Associated Press | From Page: A1

 
Michigan affirmative ban is OK, Supreme Court says

By The Associated Press | From Page: A1

GOP candidate releases education policy overview

By The Associated Press | From Page: A12

 
Ukraine orders new ‘anti-terror’ operation

By The Associated Press | From Page: A14

In Ukraine’s east, mayor held hostage by insurgent

By The Associated Press | From Page: A14

 
Acts of bravery emerge from pilloried ship crew

By The Associated Press | From Page: A14

‘Piles and piles’ of bodies in S. Sudan slaughter

By The Associated Press | From Page: A14

 
FedEx sued over deadly California bus crash

By The Associated Press | From Page: A14, 1 Comment

Obama views mudslide scene, mourns with survivors

By The Associated Press | From Page: A14

 
Analysis: Putin likely to ignore West on Ukraine

By The Associated Press | From Page: A14

Biden: Russia must ‘stop talking and start acting’

By The Associated Press | From Page: A14

 
Most Sherpas decide to leave Everest for season

By The Associated Press | From Page: A14

Grieving borrowers told to repay student loan

By The Associated Press | From Page: A14

 
Jet stowaway at hospital; security issues linger

By The Associated Press | From Page: A14

SKorea ferry toll hits 146 as search gets tougher

By The Associated Press | From Page: A14

 
IRS awards bonuses to 1,100 who owe back taxes

By The Associated Press | From Page: A15, 4 Comments

.

Opinion

 
Editorial cartoons for April 23, 2014

By Daily Republic Syndicated Content | From Page: A13

 

Groundwater becomes next big California fight

By Thomas Elias | From Page: A13

 
Fairfield’s main problem is the mayor

By Letter to the Editor | From Page: A13, 6 Comments

.

Living

Solving and resolving life’s problems

By Barton Goldsmith | From Page: A2

 
Today in History for April 23, 2014

By The Associated Press | From Page: A2

Community Calendar: April 23, 2014

By Susan Hiland | From Page: A2

 
 
A healthy take on the very not healthy Scotch egg

By The Associated Press | From Page: B6

Horoscopes for April 23, 2014

By Holiday Mathis | From Page: B7

 
How can I get my 12-year-old grandson to sleep in his own bed?

By Kathy Mitchell and Marcy Sugar | From Page: B7

.

Entertainment

DeGeneres making design series for HGTV

By The Associated Press | From Page: A9

 
Discovery to chronicle Everest avalanche

By The Associated Press | From Page: A9

Bieber seeks delay in Fla. DUI trial

By The Associated Press | From Page: A9

 
Bon Jovi helps open low-income housing in Philly

By The Associated Press | From Page: A9, 1 Comment

TVGrid

By Daily Republic Syndicated Content | From Page: A11

 
.

Sports

SCC softball ends regular season with 29 straight wins

By Brian Arnold | From Page: B1 | Gallery

 
5 Fairfield runners finish Boston Marathon

By Daily Republic staff | From Page: B1

Sharks beat Kings 4-3 in OT, take 3-0 series lead

By The Associated Press | From Page: B1 | Gallery

 
Prep swimming update: Postseason looms on horizon

By Paul Farmer | From Page: B1 | Gallery

Warriors announce new plans for SF arena

By The Associated Press | From Page: B2

 
Kentucky freshman Julius Randle to enter NBA draft

By The Associated Press | From Page: B2

AP Source: N.Y. Giants’ Hill facing 3rd suspension

By The Associated Press | From Page: B2

 
Warriors’ Curry eager to erase Game 2 nightmare

By The Associated Press | From Page: B2

Spurs’ Popovich wins NBA Coach of the Year

By The Associated Press | From Page: B2 | Gallery

 
Raiders begin offseason workouts

By The Associated Press | From Page: B2 | Gallery

David Moyes out as Manchester United manager

By The Associated Press | From Page: B2

 
Seahawks acquire QB Terrelle Pryor

By The Associated Press | From Page: B2

NFL playoff game to air on ESPN for 1st time

By The Associated Press | From Page: B2

 
MLB suspends 4 after Brewers-Pirates brawl

By The Associated Press | From Page: B2

Djokovic: Wrist better, will try to play in Madrid

By The Associated Press | From Page: B2

 
Armstrong coach Bruyneel banned for 10 years

By The Associated Press | From Page: B2

Pujols’ 500th HR helps Angels beat Nationals 7-2

By The Associated Press | From Page: B2

 
Rangers rally for two runs in ninth to beat A’s

By The Associated Press | From Page: B2 | Gallery

Beverly Hanson, forgotten pioneer in women’s golf

By The Associated Press | From Page: B2

 
Tech boom presents new wrinkles for Wrigley Field

By The Associated Press | From Page: B2

NBA Playoffs: Raptors even series with Nets

By The Associated Press | From Page: B3 | Gallery

 
.

Business

Valeant, Ackman make $45.6B Allergan bid

By The Associated Press | From Page: B9

 
Novartis reshapes business with GSK, Lilly deals

By The Associated Press | From Page: B9

McDonald’s 1Q profit slips as US sales decline

By The Associated Press | From Page: B9

 
AT&T had strong 1Q on wireless installment plans

By The Associated Press | From Page: B9

.

Obituaries

Norma O’Regan

By Nancy Green | From Page: A4, 1 Comment

 
Robert James Carty Sr.

By Nancy Green | From Page: A4

Richard P. Horn

By Nancy Green | From Page: A4

 
Dondi Martin

By Nancy Green | From Page: A4

Anne Irene Elizabeth Fulgoni

By Nancy Green | From Page: A4, 3 Comments

 
Kyong Hee Maxwell

By Nancy Green | From Page: A4

.

Comics

B.C.

By Daily Republic Syndicated Content | From Page: B6

 
Garfield

By Daily Republic Syndicated Content | From Page: B6

Zits

By Daily Republic Syndicated Content | From Page: B6

 
Peanuts

By Daily Republic Syndicated Content | From Page: B6

Wizard Of Id

By Daily Republic Syndicated Content | From Page: B6

 
Baldo

By Daily Republic Syndicated Content | From Page: B6

For Better or Worse

By Daily Republic Syndicated Content | From Page: B6

 
Dilbert

By Daily Republic Syndicated Content | From Page: B6

Get Fuzzy

By Daily Republic Syndicated Content | From Page: B6

 
Pickles

By Daily Republic Syndicated Content | From Page: B6

Blondie

By Daily Republic Syndicated Content | From Page: B6

 
Beetle Bailey

By Daily Republic Syndicated Content | From Page: B6

Baby Blues

By Daily Republic Syndicated Content | From Page: B6

 
Sally Forth

By Daily Republic Syndicated Content | From Page: B6

Rose is Rose

By Daily Republic Syndicated Content | From Page: B6

 
Frank and Ernest

By Daily Republic Syndicated Content | From Page: B6

Crossword

By Daily Republic Syndicated Content | From Page: B7

 
Word Sleuth

By Daily Republic Syndicated Content | From Page: B7

Bridge

By Daily Republic Syndicated Content | From Page: B7

 
Sudoku

By Daily Republic Syndicated Content | From Page: B7

Cryptoquote

By Daily Republic Syndicated Content | From Page: B7