Word: feds
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Dates: during 1990-1999
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...market's mind was on Greenspan again Wednesday as a tame inflation number - a 0.3 percent hike in the Consumer Price Index, with just a 0.1 hike in the "core" rate - sparked a 100-point rally that traders promptly sold off for fun and profit. On the Fed watch, TIME senior economics reporter Bernard Baumohl figures today?s number and yesterday?s ?- a mildly alarming boost in retail sales ?- cancel each other out. "My sense from the last meeting was that the Fed was done unless it saw some clear and unambiguous evidence that inflation was on the rise...
...days, three quick Fed rate increases were viewed as evidence of a booming economy and unavoidable inflation--the steps that lead to a stock market stumble. Now, though, Fed hikes don't have that kind of impact because inflation has proved inert for a decade. Even if the Fed raises interest rates a third time this fall, it won't necessarily jolt the market...
...profiting from any trend is being right about it in the first place. Despite interest rates that are markedly higher today than a year ago, it's not at all clear that rates will keep climbing. In fact, long-term interest rates--set by bond traders, not the Fed--have tumbled in recent weeks on faith that this summer's boosts in short-term rates are enough to stop inflation cold. If that's the case, the logic of the previous two paragraphs applies--in reverse. No one said this is easy. You'd want to avoid T bills...
...that seems to be the smartest play. Inflation worries have driven growth stocks, including Merck and Philip Morris, 20% lower. Some tech stocks (AT&T) are way cheaper too. Internet stocks, if you're so inclined (I'm not), have fallen even more. Yet the Fed has had the right answer for every new-age inflation scare. Why bet against Alan Greenspan now? It could be that the new era deserves a new truism. Forget stumble. Call it three steps and a start...
...Smithsonian canceled Foie Gras: A Gourmet's Passion last week after animal-rights activists--including John Gielgud and Bea Arthur--objected, saying the geese who provided the delicacy were force fed. Is it us, or have museums been easily spooked this year...