Blame it on the weather

George Yacik - Contributor - Fed & Interest Rates

I expect to hear shortly the refrain among financial analysts and talking heads to explain the recent spate of relatively weak U.S. economic news: It’s the weather!

Last year about this time, you remember, we were told that the unexpected 2.9% annualized drop in first quarter 2014 GDP was an aberration and all due to the harsh winter weather. And the economy did indeed rebound sharply after that, with full year 2014 GDP growth coming in at 2.5%. Hardly spectacular growth, but a lot better than the horrible first quarter would have indicated and certainly a lot better than other places outside China and India.

So maybe there was something to that weather thing, although I think it took way too much of the blame. Continue reading "Blame it on the weather"

Fed on the Brink of Dovishness?

Lior Alkalay - Contributor - Forex

After fending off one blow from the SNB and another, albeit positive, surprise from the ECB, investors’ focus will, naturally, shift to next week when the Federal Reserve’s rate decision will take place. “What will Yellen say this time?” markets want to know. Can the Fed Chairman really stay hawkish while the rest of the world is plunging into a new cycle of easing? These questions have loomed over Fed meetings for a while now, especially as Oil prices plummeted and inflation expectations lowered. Yet to the surprise of many Fed watchers and investors, Janet Yellen, “the dove,” continued to press forward with a hawkish tone, giving an upbeat assessment on growth and stressing the Fed’s conviction that disinflation (low Continue reading "Fed on the Brink of Dovishness?"

Is The Recent Economic Slowdown Temporary?

Federal Reserve Chair Janet Yellen noted Thursday that some recent economic data have pointed to weaker-than-expected gains in consumer spending and job growth. She said the Fed will be watching to see whether the slowdown proves only a temporary blip caused by severe winter weather.

Yellen told the Senate Banking Committee that the Fed will be alert to upcoming data to make sure that the economy keeps strengthening.

"We have seen quite a bit of soft data over the last month or six weeks," Yellen said. "We need to get a firmer handle about how much of the softer data can be explained by the weather."

Responding to a question, Yellen repeated the Fed's assurances that its pullback in stimulus for the economy is "not on a preset course" and could be modified if there was a "significant change" in the Fed's outlook. The Fed is gradually reducing its monthly bond purchases, which have been intended to keep long-term loan rates low to encourage spending and growth. Continue reading "Is The Recent Economic Slowdown Temporary?"