In a holiday-shortened week of trading, the biggest news came from the latest release of the FOMC minutes on Wednesday; a few Fed board members and presidents are uneasy about continuing the current bond buying policies. Panciked investors, fearing the potential end of the Fed’s quantative easing (QE) monetary policy, caused the markets to see its biggest two-day drop in 2013 on Wednesday and Thursday.
More M&A news stole the headlines early in the week with the potential merger of Office Depot (ODP) and Office Max (OMX), but the fear induced by the Federal Reserve minutes was not able to overcome any positive corporate earnings, economic data, or other newsworthy events . Moreover, commodities did not fare well this week, with Gold hitting the ominous “death cross” and Oil plummeting as well.
Below we look back at the week that was on Wall Street with seven articles circulating the business, finance, and economic space this week:
1. Stock Market Misunderstands Fed Minutes, Panics
at The Huffington Post
Mark Gongloff at The Huffington Post states that the big sell off this week due to the rumblings of the end of QE in the FOMC minutes was just a big misunderstanding. Though there are several members of the Federal Reserve who are weary about its bond buying practices, most voting members are committed to expanding monetary policy until the economy recovers substantially.
2. What’s Wrong with the Financial Services Industry?
at The Big Picture
We are all tied to the personal finance industry, with all of its benefits and especially its misfortunes. Barry Ritholtz at The Big Picture outlines some of the problems in the financial services industry; details that might bring about another crisis down the road.
3. Rolling Down the Yield Curve: How to Make Money by Waiting
Investors these days are searching for the best ways to see higher returns and susbtantial yields from any source possible. One great way is through dividend investing, obviously. However, understanding how to take advantage of the yield curve in bond investing can also be a great strategy to help build wealth. Marc Prosser at LearnBonds explains a method on how to roll down the yield curve.
4. When Should We Ignore Data? Intermarket Analysis Helps
Using technical, intermarket analysis, Greg Schnell at StockCharts explains how sometimes certain market data like earnings and economic news takes time to show certain trends or prices. By using intermarket analysis, investors can be ahead of the curve in knowing the top and bottoms of market movements.
5. Correction Time? Now or Never…
at Global Macro Monitor
Many analysts predict that a market correction will happen sooner rather than later. After the market dipped this week, the Global Macro Monitor blog gave a few reasons why investor should expect a market correction in the near future.
6. Impact of the Loss of the Payroll Tax Cut
The controversial end to the Social Security payroll tax holiday as part of the “fiscal cliff” resolution is starting to show some impact on the economy and in the markets. Late last week, Wal-Mart (WMT) officials were said to be worried about how a decline in take home pay may affect consumers and thus WMT’s sales. The Weakonomics blog shows how the loss of the payroll tax cut may affect the economy as the year drags on.
7. Roubini: Sequest Means Another Downgrade
Nouriel Roubini, otherwise known as Dr. Doom, is on record saying that the looming sequester will have significantly negative consequences on the US economy and markets. If the across-the-board spending cuts take effect, it is said that US GDP will contract substantially which could also mean another downgrade by a credit rating firm.
Bonus: Springsteen’s ‘Born to Run’ House for Sale
Is anyone willing to invest $349,000 in a small, two-bedroom house in Long Branch, New Jersey? As a New Jersey native and big Bruce Springsteen fan, it is hard for me to look over the possibility of investing in this piece of real estate. Who knows, maybe one day it could be the center of a Graceland-like Springsteen shrine…