$600 billion by June.
Add in the re-investment of interest and you get about $110 billion a month.
The Federal Reserve’s announcement on quantitative easing came in at about the Wall Street consensus of $100 billion a month in Fed buying And as you’d expect from an announcement that met expectations, the reaction on the U.S. stock market has been, what shall we say, muted. The S&P 500 which opened the day at 1194, sank to 1184 (a 0.08% drop) before recovering to 1198, a 0.37% change on the day.
The reaction wasn’t much more violent on the bond and currency markets. The five and seven year Treasury bonds climbed in price and fell in yield—the Fed is expected to concentrate its buying in this part of the Treasury market. (In a supplementary statement the Fed said its purchases will show an average maturity of five to six years.) Longer-dated Treasuries, the 10-year and the 30-year fell in price and climbed in yield with the 30-year Treasury with the 30-year bond moving back above the 4% level.
On the news the dollar fell against the currencies of most of its trading partners—the Canadian dollar, the euro, and the pound all gained against the dollar. Gold rallied.
This afternoon’s move—or non-move actually—is only part of the reaction. With European and Asian markets closed by the time of the Fed’s announcement, investors in the United States won’t know what overseas markets think until those markets start to open later tonight and tomorrow morning (by U.S. time.)
South,
I certainly agree with your last sentence. I promised myself I will not argue politics or say anything negative on the few boards I post on. It bums me out for some reason and life is short. Anyway, even though we may have some philosophical differences, you seem like a good dude (and bright!) so I wish you luck!!! Quick question if I may, did you sell WHR? Assuming you bought it of course.
bought no pot. Like you, I thought it would go lower and I’d be able to buy. At 138ish I’m a holder not a buyer. At 130 I’d buy more.
Two-year, the problem is we never get the chance to see if the common sense we believe in works out for us. First clinton loses the house two years in and now Obama- it appears a democratic government is too much common good for the common voter. They’d rather have the free lunch promised and let their kids clean up the mess.
southof8 – Whether or not one agrees with the election results, I do agree with you that no one should hold their breath here in the US.
On POT – did you pick up any more shares today? I decided I’d like a lower entry point (I sold at bet 142 and 143) and so the low of 139 today was kind of not worth my adding more.
I’ll save my breath argueing politics with you folks. I hope your version of “common sense” works out for you.
On too POT (Is this a bad pun?), I also sold half on the offer. I’ll keep the other half as I’m a simpleton and I assume the Chinese will want to eat 2 meals a day vs. 1.
kowloon dave – I have a feeling that although now Americans are mad at Wall St and the big banks and may support the passed financial reforms, when times get better a lot of us will forget and just focus, as always, on the performance of the stocks of these companies and look the other way if jobs are outsourced so the companies can earn more profit, etc. Sad but probably true, in my opinion.
I guess y’all didn’t catch the election results yesterday. “Reasonable govt controls” is socialism in the mind of John Boehner, the other 65 house members that got elected to replace the dems, and, apparently those who voted yesterday.
So as I said- don’t hold your breath.
Well stated, creativekey. Yeah, we Americans seem to have an obsession with free-market capitalism, even when it proves injurious to the greater good of our nation. As an investor, I like to make money but recognize that the overall wellbeing of my country is more important. I will gladly reduce or sacrifice my personal returns if that does something meaningful to create jobs for my fellow Americans. I hope that one ultimate benefit of the recent financial crisis is to educate Americans that our present system of unregulated capitalism is extremist & dangerous & that we need reasonable govt controls for the common good.
kowloon dave,
I agree that the Canadian law is common sense. I wish, too, that the US has this kind of common-sense approach but free-market capitalism seems to trump everything else here.
Amen brother. But my guess is foreign takeovers aren’t the problem and don’t drive offshoring of jobs. When Carly Fiorina was bragging about offshoring ten thousand HP jobs to India, it wasn’t because of a foreign takeover offer for HP.
southof8, you may be correct that the Canadian law is unlikely to be duplicated elsewhere. But it’s interesting to read the following description of the law: “Under the Investment Canada Act, a foreign takeover must have a net benefit for the country in terms of jobs, exports, production and investment.” That sounds so common sense, doesn’t it? I’m sure that other countries in the world also apply such common sense when dealing with vital materials & industries. It concerns me that the US govt evidently lacks Canada’s foresight & refuses to police foreign takeovers & offshoring of American jobs for the overall good of our nation.
kowloon dave,
don’t hold your breath. I know of more than a few foreign-based hedge funds levered up to their hairlines in late 2008.
Canada’s law is unique and unlikely to be duplicated elsewhere. That it has been enforced only once (POT the jury is still out) shows how popular it would be to invoke it regularly.
southof8, I hope that the POT stock works out OK for you in the end. As for Canada’s law, it’s a breath of fresh air. The recent financial crisis has shown that Canada is ahead of the US in bank regulation, currency stability, etc. It makes sense that major business & financial transactions should be subject to governmental control for the overall good of the nation. Otherwise, one can end up with companies acting out of short-term greed to the detriment of the nation. That’s essentially what happened when unregulated Wall Street investment banks, acting out of extreme greed, if not fraud, caused worldwide economic damage in 2008-2009. It may be hard for Americans to accept, but the US’s financial reputation has taken a huge hit as a result of this unregulated greed. Other nations will probably follow Canada’s lead rather than the failed American model (extremist capitalism run amok).
southof8,
Thanks for the info. I partially agree with your second guess, except I think POT won’t need another bid and will rise on its own (from the 130s) in the coming months based on improving potash fundamentals.
Like you, I sold a significant piece of POT on the news of BHP’s bid, and have been looking for a good dip like this to buy back in. So I second your decision to buy POT back. In fact, I’ll look to buy later today too. But just wait a bit after the market opens to see how POT reacts. It’s always possible it could drop a bit more on initial reactions to the Canadian announcement. But I don’t see it dropping down to the 110s at all. I think we are near the bottom for POT and then once it starts going back up, we won’t see this bottom again over the next year.
Finally some action on POT.
Canada tossed a curve and basically nixed BHP’s offer, causing POT’s share price to shave nearly 5% in after hours. To say this was unexpected is the understatement of the year- in Canada’s history its government had rejected a takeover exactly once. (Canada has a unique law that gives the government essentially veto power over a foreign takeover of a candadian company.) Before everyone goes off about how unamerican that law is, recall the US government (on extremely dubious legal grounds) prevented a takeover of a US port operator by a Saudi company. At least Canada’s law is on the books and not made up ad hoc. But I digress…
Does POT now fall like a stone back to 112, as Ed predicted the morning the offer was anounced?
Does it fall to 130 and hold (it was at 137 or so following its after hours drop).
Or does it continue to bounce around between 137 and 153, as it has for the last three months, in the anticipation of another offer?
Place your bets. I bet on the second guess. So I’ll put in a buy order after the market opens, to buy back the 50% piece I sold in August at an average of 146.
Thoughts?
Looks like the Asian markets like the Fed’s move, Jimbo. My Hong Kong accounts (mutual funds) are up 1% today (Thurs. morning there)