Five Things You Need to Know for Tuesday
What you need to know (and what it means).
Five things you need to know to stay ahead of the pack on Wall Street.
1. Ben Bernanke, FOMC BMOC
Today Ben Bernanke wraps up his first FOMC meeting as Fed Chairman, with an announcement due at 2:15 EST.
Another 25 basis point increase in the Fed's overnight target rate to 4.75% from 4.5% is all but assured.
This will be the 15th consecutive interest rate hike.
While there is little drama in today's Fed actions, there is the potential for considerable drama surrounding the accompanying policy statement.
- Will the Fed's statement reflect Bernanke's stated goal of increasing Fed transparency?
- How soon will the Fed begin to move toward Bernanke's goal of inflation targeting?
- How hinged to interest rates is the U.S. finance-based economy?
- Is February's 10.5% decline in U.S. home sales, the most since April 1997, a concern for the Fed?
2. Apparently, Card is Bolten
White House Chief of Staff Andrew H. Card Jr. announced his resignation as President Bush's top aide and will be replaced by Joshua B. Bolten, the director of the Office of Management and Budget.
- Card has served as President Bush's chief of staff since day one of Bush's presidency.
- Card approached Bush earlier this month about the possibility of stepping down, according to the Washington Post.
- Bolten is among the most respected officials within the administration.
- Bolten served as deputy White House chief of staff in Bush's first term and then was moved over to head the budget office.
- President Bush's approval rating is 36%, according to a Gallup Poll.
- Relative Strength: President Bush enjoys nearly 40% more popularity than members of Congress, however, which has just a 27% approval rating.
3. Ha Ha Ha America
China's foreign-exchange reserves overtook Japan's as the world's largest, reaching $853.7 billion.
- China's reserves have doubled in the past two years.
- A record trade surplus has helped push China's reserves higher, increasing pressure on the yuan.
- The holdings are so large that China is shifting more of the added reserves into euros and yen to reduce its exposure to dollar-denominated assets.
- China's trade surplus tripled to $102 billion last year.
- China's reserves of foreign currency, which economists say are between 70 percent and 80 percent in dollars, rose by an average $17 billion a month in 2004 and 2005.
- Today Sen. Charles Grassley will introduce a proposal threatening new sanctions against countries that are found to have "currency misalignments" with the US.
- Meanwhile, Senators Charles Schumer and Lindsey Graham, the sponsors of legislation that would impose 27.5% tariffs on all Chinese imports to the U.S., have scheduled a news conference today with US Treasury secretary John Snow.
4. Confidence Game
German business confidence jumped to its highest level in 15 years.
- The Munich-based Ifo institute said its German business confidence index had risen to 105.4 this month, from 103.4 in February.
- The move higher in business confidence was unexpected.
- The jump in confidence has increased speculation that the European Central Bank would increase its main interest rate by a quarter percentage point to 2.75 percent as early as May.
- The ECB's money and credit figures are also pointing to the possibility of more interest rate hikes.
- Growth in M3 accelerated to an annual rate of 8 percent in February, up from 7.6 percent in January and the fastest pace since September.
- Unlike other central banks, the ECB regards M3 as a useful indicator of long-term inflation trends.
5. What's Grup?
According to New York magazine, a grup is a contraction of "grown-ups." The article says "a seismic shift in intergenerational relationships" has occurred, meaning there is no fundamental generation gap anymore.
- "Grups" is a nerdy reference to an old Star Trek episode in which Kirk and crew land on a planet run entirely by kids, who call grown-ups "grups."
- All the adults have been killed off by a terrible virus, which also slows the natural aging process, so the kids are trapped in a state of extended prepubescence. They will never grow up. And they are running the show.
- According to the article, an increasing number of 35+ adults are living their lives fundamentally the same as they did when they were 22.
- "The Grup does not want a corner office. The Grup does not yearn for a fancy title. The Grup does not want-oh, please, do not ask the Grup to manage-a staff."
- Viewed in socioeconomic terms, however, Minyanville Professor Scott Reamer notes the phenomenon may be "wave 5 behavior," according to Elliott Wave Theory. "Basically, it looks like kids raising kids; never growing up, not facing the responsibilities of parenthood, having your cake and eating it too."
Up with Grups*
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