Friday, May 10, 2013

Economic Journal - Friday, 5/10/2013

(As of 7:24 am PST)
 
US stocks are inching higher as investors contemplate generally positive overseas trade with remarks on risk by Fed Chairman Ben Bernanke in Chicago this morning.  As we write this, Bernanke has moved into the Q&A portion of his presentation at a banking conference in Chicago, where the central bank chairman has for the most part spoken out on the Fed’s processes of monitoring risk.  Bernanke noted that the Fed is keeping an eye on “excessive risk-taking” as investors reach for yield in this low interest rate environment.  Referring mostly to the credit market, Bernanke said the Fed is monitoring the relationship between asset prices and fundamentals and the risks associated with certain assets if another crisis ensued.  Bernanke was not expected to comment on the Fed’s current bond-buying program (known as QE3), but with low inflation and a stagnant unemployment number it’s not expected that the Fed will unwind its easy money policies anytime soon.  In international news, Asian markets rallied with the Japanese Nikkei closing nearly 3% higher on the day.  Japanese stocks surged as the US dollar climbed above the psychologically important 100-yen level.  The strengthening dollar hit the price of gold, with gold losing $44/oz., or roughly 2.9%.  Oil prices were also down over 2%.  For the most part it’s been a quiet week, but expect a pickup in activity next week as several reports on retail sales, manufacturing, and housing are due out.

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