FED’s New Tool
Stocks fell 232 points today, and the reason?? – to take some of the profits made yesterday. What a fun market.
Bonds fell significantly in interest rates today, and I see this as an encouraging sign that the markets think the government actions are working, but slowly.
The Dollar went up significantly today against the Euro, but not the Yen. This must mean that people think the Euro has a lot of problems, and they are worse than the Dollar problems.
Gold fell to $768, and presents a great buying opportunity. Oil and gasoline also fell, as fundamentals of lack of demand are driving the price down.
In the news today…..
The FED announced a new program – the MMIFF. This program will make $540B available for the FED to purchase money market instruments (CD’s, commercial paper and short term bonds) from the money market mutual funds. (I guess it’s the mutual funds time to get bailed out.) Am I getting lazy, or is $540B just another small number? Isn’t it amazing that the Treasury had to come to Congress to get its $700B bailout financing, but the FED just prints the money.
Why did the FED announce the MMIFF program today?? Because all the previous programs to create better confidence in the markets has FAILED. I’ve reported on the commercial paper market previously, and the FED was trying to help that market, but this will go directly to help that market.
Here is the quiz for today. What are the meanings of all the FED funds that they have created to fight the economic problems plaguing the US? Their normal work is called “open market operations” – that’s buying and selling bonds on the open market. Also, they run the Discount Window. Here is the list of the “other” programs – first the latest one MMIFF, then TAF, TSLF, AMLF, CPFF, PDCF, and TSLF options. Each program has quite a few billion, so it’s easy to hide how much money the FED is pumping into the economy.
Here are Today’s numbers:
Dow Jones 30 Industrial – 9033 (down 232 points)
10 Year Treasury Bond – 3.70% (down 0.18%) – large fall in interest rates – caused by what???
Euro – $1.3055
Gold – $768 (down $22)
Oil – $70.89 (down $3.36)
Gasoline – $1.69 (down $0.03)