More fear and uncertainty surrounding our economy. I think uncertainty is the biggest understatement of the year. It is for these times that God gave us His word so we would not be troubled. We know he is in control and has a plan to keep us from the worst…but we must be watchful.
_________________________________________________________________
Stocks drop as Fed rate-setter rattles investors
LONDON – World markets fell Tuesday after a leading U.S. rate-setter dampened expectations that the Federal Reserve is preparing a massive monetary stimulus next month and amid mounting speculation that China is planning to raised reserve requirements for banks to cool lending.
In Europe, the FTSE 100 index of leading British shares was down 42.51 points, or 0.8 percent, at 5,629.89 while Germany’s DAX fell 33.09 points, or 0.5 percent, to 6,276.42. The CAC-40 in France was 47.70 points, or 1.3 percent, at 3,720.79.
Wall Street is also poised for a lower opening as trading activity picks up following the Columbus Day holiday, which kept bond markets closed and stocks sluggish Monday — Dow futures were down 52 points, or 0.5 percent, at 10,911 while the broader Standard & Poor’s 500 futures fell 6.6 points, 0.6 percent, at 1,155.70.
Stocks have been buoyant for the best part of a week as investors decided it was a near certainty that the Fed would announce a second round of so-called quantitative easing, which would involve the purchase of financial assets from the banks. That would put more dollars into the financial system in an attempt to further drive down rates on mortgages, corporate loans and other debt in the ultimate hope of boosting economic activity and supporting prices.
Though the financial markets have largely priced in further asset purchases from the Fed, there are still question marks hanging over the scale and shape of any such measures. In that context, a run of speeches this week from Fed officials, culminating with one from chairman Ben Bernanke on Friday, will be closely monitored by the markets.
Comments from Janet Yellen, the vice chairman of the Fed, Monday reined in the most exuberant hopes in the markets.
In remarks to economists in Denver, Yellen warned that excessively easy monetary policy, involving ultra-low interest rates and an expansion in the Fed’s balance sheet, could create big problems down the line.
“It is conceivable that accommodative monetary policy could provide tinder for a buildup of leverage and excessive risk-taking,” Yellen said.
Neil MacKinnon, global macro strategist at VTB Capital, said Yellen’s speech injects “a note of caution” into the debate about a further monetary stimulus, though he said Bernanke’s speech on Friday “is more important in this regard.”
Investors will also be scrutinizing the minutes to the Fed’s last rate-setting meeting later, though that took place before last week’s weak U.S. jobs report reinforced market expectations for more quantitative easing.
Markets are also awaiting earnings this week from top U.S. firms including Intel Corp., JP Morgan Chase & Co. and General Electric Co. that could provide more evidence the U.S. economic recovery is fading.
Though the prospect of more dollars in the financial system has been a boon to stocks lately, the dollar has suffered — last week, the euro pushed back above $1.40 for the first time in eight months while the dollar sank below the level that had prompted the Bank of Japan to intervene in the markets last month to rein in the export-sapping appreciation of the yen.Yellen’s comments helped ease the pressure on the dollar — by mid-morning London time, the euro was down 0.4 percent at $1.3814 while the dollar was 0.2 percent lower at 81.93 yen.
“The dollar is now recovering ahead of the release of the minutes and in response to Fed official comment that suggests the size may be less aggressive than expected,” said Derek Halpenny, European head of global currency research at the Bank of Tokyo-Mitsubishi UFJ.
Further weighing on investors were reports that China told its top six banks to increase reserves in a new move to control lending as Beijing tries to cool inflation and housing prices without derailing its recovery from the global slump.
Japan’s benchmark Nikkei 225 stock index slid 200.24 points, or 2.1 percent, to close at 9,388.64 after being closed for a holiday Monday. South Korea’s Kospi slipped 1.2 percent to 1,868.04. Australia’s S&P/ASX 200 fell 1.7 percent to 4,618.20 and Hong Kong’s Hang Seng index declined 0.4 percent to 23,121.70.
One notable exception was the benchmark Shanghai Composite Index, which rose 34.47 points, or 1.2 percent, to 2,841.41. China’s financial markets are largely closed to foreign investment and often follow different cues.
Benchmark oil for November delivery was down 82 cents to $81.39 a barrel in electronic trading on the New York Mercantile Exchange.
_________________________________________________________________
Click on the article title for a link to full original referenced article.
myBlessedHope 