Federal Reserve

Our take on the investing, financial, & economic themes of the day

Don’t Fight the Fed, But Don’t Emulate it Either: Why Your Portfolio Shouldn’t be ‘Data Dependent’

15 June, 2016 by Matthew O'Brien, Ph.D. in Commentary
Today the Federal Reserve is widely expected to announce that short-term interest rates will remain unchanged.  The Fed says that its decisions about whether or not to raise interest rates will be “data dependent,” but this doesn’t inspire much confidence, because the ... read more...

Competitive Currency Devaluation Continues Apace

29 January, 2015 by Matthew O'Brien, Ph.D. in Commentary
One of the first things that you learn about economic growth, if you learn anything at all, is that growth is not a zero-sum game.  That is, when a company like Apple increases its earnings by 40% or so, as it did last quarter, it didn’t simply “take” those earnings from its ... read more...

The Downside of the ‘Wealth Effect’

One intended goal of the federal reserve’s bond buying is to induce a “wealth effect” in homeowners by inflating the perceived value of their home.  By artificially suppressing mortgage rates, houses become easier to buy, demand for houses increases accordingly, and prices go ... read more...

Why did the market surge on the Fed’s taper decision?

20 December, 2013 by Matthew O'Brien, Ph.D. in Commentary
For months the market has waited anxiously for the Federal Reserve’s decision about “tapering” its stimulus program of large-scale bond buying, which has become known as Quantitative Easing (QE).  Many investors believe the program is propping up financial markets.  Indeed, as this graphic from ... read more...