Wednesday, May 10, 2006

The FED has spoken...

…and they have no idea what is going on. A strange couple of days. Its as if human emotion and human nature is making a big comeback throughout the capital markets.

Helicopter Ben, fresh from his public humiliation at the hands of a very feisty media personality, raised rates to a nice, even 5% today. The press release stated that future rate increases will depend on the data coming in.

Of course, Ben is a smart guy, and this kind thinking reminds me of an old George Soros quote (paraphrasing): “Shooting an arrow at a target when the act of shooting moves the target.” Lags, leads, and other nasty little inconveniences lie within data.

It is comforting to note, at least, that an institution with access to the best, most, and constant, data has as much clue as the rest of us regarding the future state of the economy.

More regression to humanity…

Meanwhile, Buffet wants to appoint his son as his heir…wow…that’s a new one. A sentarian/octogenarian business owner wants to hand over control to the single entity that can ensure his immortality.

And of course, I must mention the hysteria that is gold. When Fortune, Forbes, and Business Week start singing the praises of gold as an excellent investment, its time to re-evaluate your position…however, I do note that the Chinese central bank may diversify into Gold?

“Qin said the government should increase its gold reserves
by any possible means even though global prices have
skyrocketed over the past few months. "Over the longer
term, the yellow metal is a rare commodity, and its price
tends to rise further," said Qin, indicating the price of
gold shouldn't be a factor holding back the government.
On Tuesday, Comex gold hit $700 an ounce, its highest
level since 1980, amid strong oil prices, a weak dollar and
ongoing geopolitical concerns.”

Now that is news…if you believe that China has not been floating trial balloons over its monetary policy for the last 3 years...just in time for the United States to "stop short of calling China a currency manipulator".

No comments: