Michael Gregory
Michael Gregory
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Do they really want to end the party? Of course not, ... They want to tone the party down before something gets broken or damaged, or worse, before someone gets hurt. It's similar to a marathon: if you pace yourself properly you can get to the end without overexertion. That is what the Fed is trying to do here.
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Inflation is not a problem right now; that is not really what the Fed is paying attention to.
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The big news will be the G-7. If the markets get a sense that there's somebody out there who will do something to prevent the dollar from falling further, I think people will be relieved.
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The Bank of Japan is taking a little step towards trying some remedies, ... now appears to be more conducive to helping them.
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The Canadian currency is considered a commodity currency. When commodities prices are up, investors tend to have exposure to the currency.
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That's certainly going to be the critical number. A number indicating employment growth, particularly increases in wages, could prompt the Fed to move by the end of this month.
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The fact that we've had some decent growth, as long as it isn't associated with inflation risk, is generally good for equity markets. But we did see that wage pressure remains elevated. From that perspective, (the report) is neutral.
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the Fed is going to want to take the more cautious road. Two months is an awful long time to wait to react to evidence, particularly if that evidence indicates the economy is starting to heat up again.
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There is a lot of momentum in this economy. Consumer spending is continuing to march along, business spending is solid and you have a pick up in foreign demand.
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There's a general consensus out there that rates are headed higher in the U.S. and Europe, but there's apprehension about it anyway, ... That affecting the euro and that's affecting the bond market.
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There's little doubt out there that Greenspan will move this time around and try to put the brakes on growth a bit. The question is whether this is a one-time deal or a continuation of a series of moves meant to really keep the economy in line.
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The trend is improving in manufacturing as businesses pick up the pace of spending on equipment, so we're looking for continued expansion in the factory sector.
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Is there a risk the Fed has tightened too much? Not with the kind of momentum we're seeing in the economy and not with consumer confidence at record highs. People are wealthier, real incomes are growing, the housing market, while slower, is still super strong and the labor market is still super tight. I don't think the Fed is finished just yet.
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As far as the Fed goes, it really isn't inflation on the ground that's a concern, it's inflation down the road. For a very long time, they've offset that with global concerns, but there doesn't appear to be any more world crises to worry about.