The FOMC tightened the money supply on Tuesday by raising the Fed funds rate by 25 basis points to 3.75%, for the 11th time in about 18 months. Consequently SPX fell more than 30 points Tuesday to Thursday, and closed the week down about 23 points, to just over 1,215.
Price stability is the primary objective of the Federal Reserve, because if the Fed targets inflation, growth fluctuates little. However, when the growth is directed inflation fluctuates a lot, which eventually leads to instability. The data show that the Fed has done an excellent job of smoothing out the business cycle done in the past 20 years. Sustainable growth is optimal growth, so the standard of living increases at the fastest possible rate.
The current Fed Funds Rate is still accommodative. Normally, a neutral attitude is more than 5%. However, the Fed has been brilliant in lowering inflation expectations, which lower future inflation, the tightening cycle by using a combination of "jawboning" and actual tightening. Consequently, the economy of above trend growth to growth trend shifted smoothly. The smooth downshift in economic growth is reflected in the stock market. The VIX (S & P 500 Volatility Index) fell below 10 two months ago, which was a multi-decade low. VIX reflects investor fear, and there is little fear of the stock market recently.
The chart below is a weekly chart of the SPX to VIX ratio since 1990. Over time, it will rise and SPX VIX will trade in a range. So, the ratio will increase. Also, there is usually an inverse relationship between SPX and VIX, ie when SPX rises, VIX falls, and vice versa. The 200-week MA (red line) shows the ratio is mean reversion. Typically, when the ratio of 30 to 40 points of the 200-week MA, MA expires this direction. The 40-week MA (blue line) shows a sharp increase over the 2 1/2 year cyclical bull market. Thus, when the ratio rises above 100, care may be needed intermediate term.
Economic reports next week are: Mon: Existing Home Sales, di: New Home Sales and Consumer Confidence, Wed: Orders for durable goods, don: Unemployment Claims, Final GDP and Final GDP deflator, Fri: Personal Income, Personal expenses, Revised Michigan Consumer Sentiment, and Chicago PMI. Notable earnings next week: Monday: WAG, di No, Wed: RIMM RHAT KMG, Thurs: PEP, Fri None.
I believe the market will rise next week in the new district, but there may be some more profit warnings. It seems, end-of-the-quarter window dressing has already been completed (eg oil rose a week ago, while oil prices fell). Volatility can pick up when the result season starts in October, and some stocks rise and other stocks will plummet on earnings. Economic reports and oil prices should continue to influence the market.
Tickets available at Forum Index Market Overview section.
Arthur Albert Eckart is the founder and owner of Peak Trader. Arthur has worked for commercial banks, eg Wells Fargo, Banc One, and First Commerce Technologies, during the 1980s and 1990s. He has also worked for Janus Funds 1999-00. Arthur Eckart has a BA and MA in Economics from the University of Colorado. He has worked on options portfolio optimization since 1998.
Mr Eckart has to maximize a comprehensive trading methodology using economics, portfolio optimization, and technical analysis and minimize risks at the same time and developed over time. This methodology has resulted in excellent returns with low risk over the past four years.
Friday, 30 May 2014
Thursday, 15 May 2014
Coins, More Than Just Money
Time for Change
The Congress of the United States is again considering a number of issues relating to our currency and coins. These include the Dollar, district, and Cent. Many want to stay with the current design, in Congress and pass laws so they can not be changed.
The first law that currency design dates from 1792. Many coins in this time wanted our nation to bear. The image of George Washington Washington was very adamant against this idea, referring to a coin with the image of a person to be monarchical. In September of 1792 the Morris bill proposed our coins bear the characteristic image of the Liberty. Rep. John Page, under Washington served during the French and Indian wars not only echoed the presidential objection, but pointed out that how happy they would be with the incumbent, there was no reason to believe that their offspring would be happy with some of his successors. Other members of Congress insisted that it was not a real compliment to emphasize a medal. An image of Washington The basics of coin designs were not for the honor of men. It was hoped by the founders that our coins would represent and honor all of America. Lady Liberty was chosen as the design, because she was one of our most important rights. A symbol that every American could understand and embrace.
This bill was signed into law on April 2, 1792. This law is the basis for subsequent U.S. coins laws, it is known as "the statutes One".
The Act of 26 September 1890 stated that the changes in the designs of the United States coins not more than twenty-five years without congressional approval can be made. Each design circulating twenty-five years or more may be changed without their consent. Since that date, all denominations, changed many times without the need for congressional action. Today, Congress is to make this law infringement. The Jefferson five cent coin by the new law will return to a statue of Jefferson and Monticello in 2006. Congress is also considering a bill that the image of Washington would need to be in the neighborhood, standing together with the Lincoln Cent. They are following the early logic of Henry Ford. Mr. Ford thought a car in a color was good enough for the masses. American does not accept this logic then, and we should not be forced to accept it.
We as Americans love and embrace change. We expect this in our fashion, cars, televisions, and in our daily lives. Would any of us are happy when the Manufacturers of America has decided that the current design was the best for us, and never made something new or different? Are we so arrogant to believe that our choices today are suitable and acceptable for future generations?
The first draft amendment to the Washington quarter took place in 1999. This was the first major change since 1932. The United States Mint estimates that more than 100 million Americans collecting the State Quarters. That equates to 1 in 3 of Americans collecting coins. The evidence is clear for all to see. What happens to the 100 million plus Americans who are currently collecting these coins at the designs go back to the same as they have been back? What will be the reason to continue collecting coins? The United States Mint and the Bureau of Engraving earn much of their profits by republishing currency no longer in circulation. If our coins and currency are never changed, why would anyone want to withdraw from circulation? This requires the government to wait until they wear out. While currency has an average circulation of 18 to 24 months, the coins to circulate to 38 years.
Most Americans today have only witnessed a few minor changes in the design of our currency. The last major change for the State Quarter program was replaced Franklin on the half dollar with Kennedy. Now we have five of the six coins bearing the likeness of a president. A new bill is being heard on Capital Hill in connection with a new dollar design. This will make. Our sixth and final coin with a presidential design The bill a new commemorative circulation honoring each president in the order of the mandate would create. Most Americans would agree that all these men do not have to be honored in this way. Our founding fathers knew this.
Our current elected leaders have not yet figured this out. They have not learned that change like a good thing. They insist that we maintain our lackluster currency and coins in an everyday attempt to keep the political peace. Proponents of the current designs have but to present forever. A good argument for keeping the images That wish is to continue honoring these great men. That no one should be lost to history. Our founding fathers knew this was no honor. How can we honor these men while we do not choose their desire of not allowing a person on a coin to be placed to honor?
Each collector is aware how our coins has been stagnant. The designs are stale and mediocre at best. It does a lot of effort to coins dating 30 years or more in our pocket change will not take. This is directly related to a lack of interest. Many studies have been done on circulating quarters. More eagle reverse Washington quarters are found in change than the new state quarters.
Collectors across the country tell the story of how difficult it is to get the newest neighborhood in circulation. All of the new designs have helped to school curricula, and a revived interest in the history of our nation spark. I would think this is a lesson for all would be involved. We must change. Even if the decision is made that the current images should be maintained, they should be updated on a regular basis. If Congress wants to update the currency legislation, it must be that all designs are required to be replaced every 25 years, not etched in "forever".
It's time to inform you that it is time to change the congress.
The Congress of the United States is again considering a number of issues relating to our currency and coins. These include the Dollar, district, and Cent. Many want to stay with the current design, in Congress and pass laws so they can not be changed.
The first law that currency design dates from 1792. Many coins in this time wanted our nation to bear. The image of George Washington Washington was very adamant against this idea, referring to a coin with the image of a person to be monarchical. In September of 1792 the Morris bill proposed our coins bear the characteristic image of the Liberty. Rep. John Page, under Washington served during the French and Indian wars not only echoed the presidential objection, but pointed out that how happy they would be with the incumbent, there was no reason to believe that their offspring would be happy with some of his successors. Other members of Congress insisted that it was not a real compliment to emphasize a medal. An image of Washington The basics of coin designs were not for the honor of men. It was hoped by the founders that our coins would represent and honor all of America. Lady Liberty was chosen as the design, because she was one of our most important rights. A symbol that every American could understand and embrace.
This bill was signed into law on April 2, 1792. This law is the basis for subsequent U.S. coins laws, it is known as "the statutes One".
The Act of 26 September 1890 stated that the changes in the designs of the United States coins not more than twenty-five years without congressional approval can be made. Each design circulating twenty-five years or more may be changed without their consent. Since that date, all denominations, changed many times without the need for congressional action. Today, Congress is to make this law infringement. The Jefferson five cent coin by the new law will return to a statue of Jefferson and Monticello in 2006. Congress is also considering a bill that the image of Washington would need to be in the neighborhood, standing together with the Lincoln Cent. They are following the early logic of Henry Ford. Mr. Ford thought a car in a color was good enough for the masses. American does not accept this logic then, and we should not be forced to accept it.
We as Americans love and embrace change. We expect this in our fashion, cars, televisions, and in our daily lives. Would any of us are happy when the Manufacturers of America has decided that the current design was the best for us, and never made something new or different? Are we so arrogant to believe that our choices today are suitable and acceptable for future generations?
The first draft amendment to the Washington quarter took place in 1999. This was the first major change since 1932. The United States Mint estimates that more than 100 million Americans collecting the State Quarters. That equates to 1 in 3 of Americans collecting coins. The evidence is clear for all to see. What happens to the 100 million plus Americans who are currently collecting these coins at the designs go back to the same as they have been back? What will be the reason to continue collecting coins? The United States Mint and the Bureau of Engraving earn much of their profits by republishing currency no longer in circulation. If our coins and currency are never changed, why would anyone want to withdraw from circulation? This requires the government to wait until they wear out. While currency has an average circulation of 18 to 24 months, the coins to circulate to 38 years.
Most Americans today have only witnessed a few minor changes in the design of our currency. The last major change for the State Quarter program was replaced Franklin on the half dollar with Kennedy. Now we have five of the six coins bearing the likeness of a president. A new bill is being heard on Capital Hill in connection with a new dollar design. This will make. Our sixth and final coin with a presidential design The bill a new commemorative circulation honoring each president in the order of the mandate would create. Most Americans would agree that all these men do not have to be honored in this way. Our founding fathers knew this.
Our current elected leaders have not yet figured this out. They have not learned that change like a good thing. They insist that we maintain our lackluster currency and coins in an everyday attempt to keep the political peace. Proponents of the current designs have but to present forever. A good argument for keeping the images That wish is to continue honoring these great men. That no one should be lost to history. Our founding fathers knew this was no honor. How can we honor these men while we do not choose their desire of not allowing a person on a coin to be placed to honor?
Each collector is aware how our coins has been stagnant. The designs are stale and mediocre at best. It does a lot of effort to coins dating 30 years or more in our pocket change will not take. This is directly related to a lack of interest. Many studies have been done on circulating quarters. More eagle reverse Washington quarters are found in change than the new state quarters.
Collectors across the country tell the story of how difficult it is to get the newest neighborhood in circulation. All of the new designs have helped to school curricula, and a revived interest in the history of our nation spark. I would think this is a lesson for all would be involved. We must change. Even if the decision is made that the current images should be maintained, they should be updated on a regular basis. If Congress wants to update the currency legislation, it must be that all designs are required to be replaced every 25 years, not etched in "forever".
It's time to inform you that it is time to change the congress.
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