ok - time to flagellate a deceased equine! (Beat a dead horse)
This past week was a doozy! The Federal Reserve lowered the Fed Funds rate by 3/4% to 3.5%. The last time we saw 3.5% in the Fed Funds Rate was October 2006! This action by the Fed, news results of various companies stating earnings, a $7 Billion trading scandal, an economic stimulus package presented by Congress, as well as other news items caused the Dow to close up 100 points for the week and the FNMA 5.5% 30 year bond to close down 3 bps - barely a change from last week.
Looking at just the weekly numbers, one would think that the Fed lowering rates didn't cause much of a stir. If you followed the daily results - any of Forbes' top ten roller coasters might be a walk in the park. Though the Dow actually only closed up 100 points, it actually fluctuated close to 1,100 points for the week. The FNMA 30 year bond fluctuated nearly 1.1 percentage points.
Did the Fed do a good thing by lowering the Fed Funds rate? - that is still being debated by the various pundits and still remains to be seen.
The economic stimulus package announced by Congress with support from the White House caused quite a stir. Though only still a bill (thanks to Mike Mueller), the package promises $600 per person for those with less than $75,000 income & attempts to raise the FNMA limits from $417,000 all the way to between $625,000 to $700,000! That could be huge!
News wise - Existing Home Sales fell again and Initial Jobless Claims report came in lower than expected (certainly not a harbinger of doom).
News coming out this week will show if the Fed was on the right track. Consumer Confidence, the regularly scheduled Fed Meeting, Personal Expenditures, Average Work Week, Personal Spending & Inflation are just some of the big ones being reported.
Get ready for another wild week!
Past week's advice
To learn why one should Float or Lock -
Check out Should I float? Should I lock? & Reasons to Float or Lock
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