Waiting on the Fed

It should be clear to you by now that in the United States the Federal Reserve Bank is calling the shots in our financial markets.  To a lesser extent this phenomena is happening all over the world. As such, the markets did little this week because the Fed doesn’t meet again until Tuesday.

  As expected, the European Central Bank announced additional monetary stimulus in its effort to jump-start the EU economies. Global markets liked what they heard and bought stocks to celebrate.

At the beginning of the year Wall Street was certain that interest rates were on their way up. Investors dumped all kinds of bonds anticipating that prices would plummet.  Bond prices did the upset. Go figure.

Labor on their mind

  It is that time of the year again when the world’s central bankers gather together in Wyoming to sort out the economic conditions of the global economy. This year most bankers will be looking at labor growth, or lack thereof, and what to do about it.

Just a few months ago things were looking up in Europe. The economy seemed to be growing modestly, their central bank was talking about further efforts to stimulate the economy and even the PIGS were beginning to recover. And then came Putin.

  The front page of most newspapers on Friday featured at least three hot spots around the world that has investors worried. None of them may be anything to worry about over the long term, but over the next few weeks they have the potential to drive the stock market lower.

Markets fell on Thursday reacting to the news that a commercial airliner had been shot down over the Ukraine. Stocks extended their fall when Israel invaded Gaza later in the day. But by Friday investors, trained to buy the dip, had rushed back into stocks, recouping most of the losses.

A spate of global stock market selling put an end to the atmosphere of growing complacency among investors this week. The turmoil came from a variety of sources including Europe, the Middle East and China. The jury is still out over the market’s next move.

The stock markets enjoyed its own brand of fireworks this week. Stocks edged higher, with the Dow almost touching another all-time high of 17,000. You just can’t keep a good market down.

  Sometimes even the stock markets need to pause and catch their breath. This was one of those weeks where the averages, were down, although not by much.