Parsing the Fed Statement

The WSJ reported that "THE FED’S STATEMENTS reflect how the members of the central bank’s Federal Open Market Committee perceive the economy. The Aug. 8 statement announced that the Fed was keeping rates steady at 5.25%, its first pause after 17 increases in 17 meetings."

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The Fed is betting slower economic growth will ease currently high
rates of inflation. In its statement, though, it also took out a
reference to productivity gains’ chilling effect on price levels.


Pressing Pause
WSJ, Tuesday, Aug. 8, 2006

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Discussions found on the web:
  1. Mark commented on Aug 8

    … and that would be because the data no longer suggests that.

  2. ss commented on Aug 8

    “The Fed is betting slower economic growth will ease currently high rates of inflation. In its statement, though, it also took out a reference to productivity gains’ chilling effect on price levels.”

    Well I agree…but more with the second statement. Cisco is a good barometer of productivity.
    John Chambers of CSCO this evening:

    “In terms of revenue guidance for the upcoming fiscal 2007, including our usual caveats discussed in prior calls, we project year-over-year revenue growth of approximately 15 to 20 percent and Cisco stand-alone revenue growth of 10 to 15 percent, which is consistent with our prior long-term guidance,” he said.
    “Our (first quarter, financial year) ’07 year-over-year
    revenue guidance is for revenue growth of approximately 19 to 21 percent and Cisco’s stand-alone year-over-year revenue growth of 11 to 13 percent.”

  3. JDamon commented on Aug 8

    And as amazingly bullish as Chambers was (for him anyways), how much you want to bet Cisco can’t save the market all by its lonesome like it used to?

    This is a Company with a growth rate higher than it’s P/E (PEG ratio below 1 folks), yet it will go nowhere in this market of pessimism and destruction. Profits/revenue don’t matter anymore, it’s all about GWB and congress being handed over to the Dems. Once that happens, then we will see the markets rise. Markets are being manipulated.

    BTW, when hedge funds are shorting, there doesn’t have to be too many of them doing it, just doing it in a coordinated fashion is enough to take down most stocks.

  4. jkw commented on Aug 8

    Would that be the same market manipulators that drove the market up in November of 2004? They seem to change sides pretty quickly if they drove the market up because the Republicans won the last election and now they are going to drive it down unless the Democrats win.

    It is easy for a few hedge funds to manipulate a few stocks. They cannot manipulate any of the major indices for very long. There are too many people that are just in it for the money to go along with it. All it would take is a few other hedge funds pushing the manipulators into margin squeezes and the manipulating funds blow up. That’s why you have to invest based on what the market is doing, not what you want to have happen. Because if you invest based on where the market wants to be, then margin squeezes against your position will fail because there would be too much resistance.

    Unless you actually think there are trillions of dollars being used to manipulate the market for political reasons. But that money would be more effective if it was invested wisely and then spent on campaigns one way or another. Why would someone expose themselves to a huge risk and reduce their returns just to do something they could do by directly spending money? A bunch of rich liberals could set up the liberal counterpart to Fox News. It would be a much better use of money than trying to manipulate the market to get Democrats elected. Your theory relies on people being smart enough to get away with manipulating the market, but too stupid to realize that there are better ways of accomplishing whatever they are trying to do.

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