Investors this week were inundated with news about the debt ceiling and the Federal Reserve’s stance on monetary policy.
Central bank officials gave no fewer than 11 speeches in the five days through Friday, in which they either openly criticized him or tried to explain Chairman Ben Bernanke’s decision not to reduce the stimulus program. Texas Republican Ted Cruz, meanwhile, tried to shut down the government in a bid to defund the Affordable Care Act, which already has been passed by Congress.
In economics, gross domestic product expanded 2.5% in the second quarter, according to the final reading issued by the government. The economy has been volatile, expanding as fast as 4.9 percent and contracting as much as 1.3 percent since the beginning of 2011.
Below is a wrap-up of Money and Markets’ highlights of the past week as well as links to articles written by Weiss’ newsletter editors.
The ramifications of the Fed’s decision to delay tapering its bond-buying program can still be felt in the markets, but Bernanke has a chance to heal the U.S. economy, Larry Edelson says. In his open letter to the chairman, Larry explains how the central banker can avoid a catastrophe.
Doug Davenport argues that nobody should have been surprised by the Fed’s decision. Doug points to the fact that Bernanke has been the most transparent Fed chairman ever.
J.R. Crooks critiques a Bloomberg article that says the Fed might become the world’s central bank and faces additional global responsibilities if it doesn’t change its policies.
Surveying the globe, Bill Hall recommends watching emerging markets. In his article, he explains why they’re attractive now that values have fallen to reasonable levels. Bill also gives an overview of the performance of an emerging-markets mutual fund that deserves investors’ attention.
In emerging markets, China announced plans to open a free-trade zone in Shanghai and build an $8.2 billion movie metropolis that would rival Hollywood. At the same time, the economy showed buoyancy, with industrial production increasing more than economists had expected.
The currency market will soon offer a good investment opportunity, J.R.Crooks says. This dollar-yen chart helps explain why, he argues.
Mike Burnick listed economic data that investors should pay close attention to, including new-home sales, income growth and company earnings. Check out his charts to see why.
If you follow Mike Larson’s interest-rate analysis, take a peek at these charts — they prove that rates will rise, he says. And that opens profitable investing opportunities for investors.
Doug Davenport analyzed the performance of two tech funds and showed why investors may have picked the wrong one.
Best wishes,
The Money and Markets Team
