Posts filed under “Federal Reserve”

New Column up at The (08/11/06)


The Real Money column I mentioned yesterday has been moved to the (free) The side.

Its a summary of lots of Fed related research: When the Fed Stops Tightening.

Here’s an excerpt:

"1980 seems to be a dividing line when it comes to the Fed. In the majority of cases from 1980 forward, markets did rather well after the Fed finished. Prior to that year, markets were generally lower six and 12 months after a tightening cycle ended.
In October 1982, the Fed shifted its emphasis from money-supply measures and "nonborrowed reserves" to an explicit fed funds rate-targeting procedure. That could very well be part of the basis for the change in results after Fed tightening ends. (See: When Did the FOMC Begin Targeting the Federal Funds Rate? for more detail.)

My conclusion is that the context of the Fed hiking cycle is what matters most to markets. During secular bull markets, Fed tightening seems to cool inflation and allows markets to keep rising. During bear periods, the Fed cycle seems to stop just before a major economic slowdown begins. The decrease in revenues and earnings then pressures equity prices.

Let’s examine some of these other studies. InvesTech Research looked at market performance over the following three, six and 12 months after the end of a tightening cycle, from 1929 to 2000 . . ."

Go check out the full piece — I think it came out pretty well, and is surprisngly even handed.


When the Fed Stops Tightening
Barry Ritholtz, 8/10/2006 9:14 AM EDT

Category: Federal Reserve, Financial Press, Investing, Markets

New Column up at Real Money (08/10/06)

Category: Data Analysis, Federal Reserve, Inflation, Investing, Markets, Psychology

Market Behavior after the Fed Finishes

Category: Federal Reserve, Markets, Technical Analysis

the Pregnant Pause

Category: Federal Reserve, Investing, Markets, Real Estate, RR&A, Trading

Beware Periods of Crisis Post Fed

Category: Federal Reserve, Fixed Income/Interest Rates, Inflation, Markets, Psychology

Fed Funds: Typical Cycle

Category: Federal Reserve, Technical Analysis

Parsing the Fed Statement

Category: Federal Reserve

The Dovish Pause

Category: Federal Reserve

Potential Outcomes of Fed Meeting

Category: Federal Reserve, Markets, Trading

What interest-rate action should the Fed take?

Category: Federal Reserve, Psychology