Friday Morning Cheat Sheet: 3 Stories Moving Markets
The markets were mixed in Asia overnight. Japan’s Nikkei increased 2.88 percent on Friday, closing up after a volatile week (more on that below). The Hang Seng fell 0.08 percent, while the S&P/ASX 200 climbed 0.52 percent.
The markets were up in Europe heading out the opening bell in New York. Germany’s DAX was up nearly 1.4 percent, London’s FTSE 100 was up about 0.21 percent, and the STOXX 50 was up about 0.83 percent. Brent Crude climbed to $113.68 per barrel.
U.S. markets at 10:15 a.m.: DJIA: +0.22%, S&P 500: +0.45%, NASDAQ: +0.54%.
1) The Federal Reserve’s balance sheet has grown to a record size with just over $3 trillion in total assets. Chairman Ben Bernanke, exercising the full authority of his office, effectively put the pedal to the metal with $85 billion in monthly securities purchases. This easy-money policy was designed to give the economy enough gas to enter a self-sustaining recovery, but so far progress has been dubious.
Many have argued that the Fed’s current strategy has played itself out, citing diminishing returns and the tremendous instability of the Fed’s massive balance sheet. Minutes from the Federal Open Market Committee meeting in December reveal a divided house, with some policymakers unsure whether asset purchases should continue through the end of the year.
The Fed is looking for U-3 unemployment to hit 6.5 percent as a sign that it can let up on the gas. But at 7.8 percent and only 150,000 jobs added per month, on average, the Fed won’t hit its target rate until some time in 2014.