Well the news broke this afternoon, that due to the United States economy, in all appearances heading for a double dip recession, the Federal Reserve would have to do another drastic measure to try to jolt the economy back into recovery:
4:30 pm : A negative response to the Fed’s “Operation Twist,” so labeled by market participants, stirred sellers to action today. Their conviction made it impossible for tech stocks to provide leadership after trading with strength for so much of the session.
The FOMC announced this afternoon that in order to support a stronger economic recovery it intends to purchase $400 billion of Treasuries with maturities of six years to 30 years, while selling an equal amount of Treasuries with remaining maturities of three years or less, by the end of June 2012. Many market pundits had anticipated such a plan, and had already designated it “Operation Twist” to reflect the Fed’s focus on selling shorter term Treasuries and buying longer term issues.
To little surprise, the FOMC also reiterated that it expects economic conditions to warrant exceptionally low levels of the federal funds rate at least through mid-2013.
A knee-jerk response to the Policy Statement made for some whipsaw action among stocks, but the major equity averages eventually broke down and descended deep into negative territory. The Dow, S&P 500, and Nasdaq Composite all closed at session lows.
Although nothing slight, the Nasdaq’s loss wasn’t quite as severe as that of its counterparts. The Nasdaq had been propped up for the better part of the session by tech plays following better-than-expected quarterly reports and forecasts from Oracle (ORCL 29.82, +1.47) and Adobe (ADBE 24.93, +0.29). Autodesk (ADSK 28.71, +0.60) also attracted buyers after analysts at JPMorgan upgraded the stock.
Source: http://finance.yahoo.com/marketupdate/overview?u
What President Obama, the Democrats & the Republicans in congress don’t get is that in order to grow the economy we need a few basic things:
1) Low Tax Rates & A Simpler Tax Code
2) A Reasonable Fiscal Situation
3) And a pledge to keep government out of our lives and out of health care – this includes a full repeal of Obamacare
The Republicans get the the key points above, what what many of them don’t get is that in order to get a reasonable fiscal situation, a tax overhaul will need to include a form of higher tax revenues, this will come from actually cutting tax rates but eliminating loopholes in the tax code.
Sadly, I don’t think we are going to solve our economic problems as a nation and allow for businesses to grow again until we have a new President and a Congress that is willing to follow and work with that President. It will be great to see if Rick Perry or Mitt Romney will be able to lead the nation towards doing this as they campaign for President.
Only once elected they must deliver the goods, and then business can beging to grow and prosper in a strong way again. Then, I can expect to see that Choice Merchant Services will see that on average our clients will be processing about 5% more sales in 2013 than they did in 2012. When that happens, we can expect to see unemployment drop, this will solve the housing market problems, and then our nation will prosper once again.
