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WASHINGTON (MarketWatch) -- Federal Reserve policymakers discussed at their August 7 meeting the possible need for "a policy response" if financial market turmoil continued, according to the minutes of the meeting released Tuesday.

Members agreed a further deterioration in financial conditions "could not be ruled out and, to the extent such a development could have an adverse effect on growth prospects, might require a policy response."
But at the meeting, Fed officials only agreed to keep a close eye on financial market conditions. They said inflation remained the most significant policy concern.
During their meeting, the members of the Federal Reserve Open Market Committee clearly saw downside risks to the growth outlook from the market turmoil.
They said the adverse developments in the mortgage markets "suggested that the adjustment in the housing sector could well prove to be both deeper and more prolonged than had seemed likely earlier this year."
But there was no sign of disagreement among policymakers that inflation remained the number-one threat on August 7.
A lower dollar and poor productivity data contributed to upside risks to inflation, the minutes said.
Fed officials said that the strong labor market, growth in income and the export sector would offset the weak housing market and lead to moderate growth in coming months.
However, the Fed staff did trim its growth outlook for the second half of 2007 and 2008 as a result, in part, of the financial market turmoil.
In fact, financial market conditions did worsen, and only ten days later, the FOMC issued another statement, saying that worsening financial conditions had increased the downside risks to growth "appreciably."
At the same time, the Fed cut its little-used discount rate by a half a percentage point to 5.75%. See full story.
The minutes released today do not include any discussion among Fed officials prior to the Aug. 17 statement.
By cutting the discount rate instead of the federal funds rate, the Fed signaled that it believes problems are mainly confined to the financial system, and are not yet impacting the broader economy. The cut in the discount rate provides funds to banks, but does little to change consumer and commercial interest rates, as a cut in the federal funds rate would do.
Despite clamoring from some quarters on Wall Street, the FOMC has not lowered its fed funds target from 5.25%. Many economists believe the FOMC will lower that rate when it meets again on Sept. 18. See full story.
Greg Robb is a senior reporter for MarketWatch in Washington.

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The mystery investor has bought put option contracts on the DJ Eurostoxx 50 index that will result in a profit if it plunges to 2,800 or below by the end of September. Based on the 2,800 strike price, the position covers a notional €6.9bn, and potentially even more using a market price of about 4,100 when the trades were done on Tuesday and Wednesday.

The identity of the investor is unknown but market sources speculated it was either a large hedge fund hedging itself against deepening losses, or a long-only fund manager pressing the panic button to protect its gains.

The investor has bought a total of 245,000 put options on the index. The September put option with a 2,800 strike was the most popular DJ Eurostoxx 50 contract yesterday, according to data from Bloomberg.


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Beurscommentaar BNR Nieuwsradio 12.45 uur

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-Gedurende de ochtend is de stemming op de Europese aandelenmarkten langzaam verbeterd. Het waarom en hoezo is niet heel duidelijk, een direct aanwijsbare oorzaak was er in ieder geval niet. De omzetten en koersbewegingen stellen overigens maar weinig voor.

-Gisteren in de VS kwamen er in ieder geval voldoende tegenvallertjes beschikbaar. Let niet op de notulen van de Fed, want een dag of 10 later is al duidelijk geworden dat de Fed anders over de wereld is gaan denken. Let wel, en goed ook, op de ontwikkelingen van de huizenprijzen die nadrukkelijk aan het dalen zijn. Dit waren de cijfers van een paar maanden geleden en daarna is de situatie op de huizenmarkt alleen maar verder verslechterd. Meer ellende op komst dus.

-Let ook op (en goed svp) op de berichten over bedrijven/instellingen etc. die in problemen aan het komen zijn zonder dat er concrete getallen en prijzen genoemd worden. Het grootste probleem op dit moment is immers dat de financiele partijen elkaar niet meer vertrouwen omdat er te weinig opening van zaken wordt gegeven over datgene wat men probeert te verkopen. En het is simpel: geen/te weinig informatie is synoniem met erg lage biedingen en dus grote verliezen als er een deal tot stand komt.

-Trap ook niet in de drogredenering die 'lagere korte rente als oplossing' heet. Het vertrouwen in elkaar heeft nada niets en nul met de prijs van geld te maken. Tough love, dat gaat Bernanke uitdelen. Begin zelf maar met het oplossen van de problemen die jezelf veroorzaakt hebt. Begin dus in veel gevallen eerst maar eens om serieuze verliezen te accepteren.

29 augustus 2007

Kees de Kort

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Bernanke said the Fed was closely monitoring conditions in financial markets and has taken steps to ensure that there is ample liquidity including by lowering its discount rate for loans to banks.


"Also, the Federal Open Market Committee has stated that it is monitoring the situation and is prepared to act as needed to mitigate the adverse effects on the economy arising from the disruption in financial markets," Bernanke wrote.


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WASHINGTON (MarketWatch) -- The private sector and Congress should create new, affordable mortgage products that would help some homeowners refinance their mortgages and keep their homes, Federal Reserve Chairman Ben Bernanke suggested in a letter released Wednesday.

In the letter to Sen. Charles Schumer, D-N.Y., Bernanke repeated that the Fed is closely monitoring markets and stands ready to act if needed. The Fed issued a statement with almost identical wording on Aug. 17 after it cut the discount lending rate to 5.75%. The letter from Bernanke was dated Aug. 27 and released by Schumer's office on Wednesday.
Calling it a "bullish" letter, bond market strategist Tony Crescenzi of Miller Tabak said Bernanke was "very sympathetic to concerns expressed quite strongly in the financial markets of late."
"If this tone is repeated on Friday, the conclusion will be that the Fed will lower the fed funds rate" by the Sept. 18 meeting of the Federal Open Market Committee, Crescenzi said. Bernanke is scheduled to give a speech on housing and housing finance on Friday.
Most economists and market participants expect a rate cut by the FOMC.
In his letter, Bernanke called for creative thinking to get the nation out of its subprime mess.
"It might be worth considering at this juncture whether the private and public sectors, separately or in collaboration, could help the situation by developing a broader range of mortgage products which are appropriate for low-and moderate-income borrowers, including those seeking to refinance," Bernanke wrote.
"Such products could be designed to avoid or mitigate the risk of payment shock and to be more transparent with respect to their terms," Bernanke wrote. "They might also contain features to improve affordability, such as variable maturities or shared-appreciation provisions for example."
Congress is considering legislation that would reform the Federal Housing Administration, which is a federal agency that provides mortgages to low-income buyers. FHA loans have been largely supplanted by subprime lending from the private-sector. But FHA loans, with tighter lending standards and less onerous terms, have not defaulted at the rates recently seen in subprime loans.
Under current law, the FHA cannot lend to those who are behind on their mortgage payments.
Congress is also considering legislation that would reform oversight of the so-called government-sponsored entities Fannie Mae (FNM:Fannie Mae
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Some have suggested that Fannie and Freddie be allowed to buy more mortgages beyond their current maximum as a way of injecting more liquidity into very tight money markets. It has also been suggested that Fannie and Freddie be allowed to buy mortgages larger than the $417,000 conforming loan limit. The White House has opposed any loosening of Fannie and Freddie's buying.
Bernanke said Fannie and Freddie could expand their lending without changing their portfolio caps by selling some of their current holdings in the market.
Rex Nutting is Washington bureau chief of MarketWatch.

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Beurscommentaar BNR Nieuwsradio 12.45 uur

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-Hopen op goed nieuws, dat is de stemming vanmorgen op de Europese aandelenbeurzen. Veel wat hogere koersen dus met omzetten die niet zoveel voorstellen. Het nieuws dat beschikbaar is gekomen doet er even niets toe. Er wordt gewacht op de twee B's, Bush en Bernanke.

-Later vanmiddag gaat Bernanke spreken over monetair beleid en de huizenmarkten. Het moge erg duidelijk zijn dat de financiele markten er min of meer vanuit gaan dat Bernanke heel erg veel rekening met hun wensen gaat houden.

-Gisteravond werd ook duidelijk dat de Amerikaanse regering maatregelen aan het voorbereiden is om in problemen geraakte huizenbeziters de helpende hand toe te steken. De fijne details daarvan gaan ook later vanmiddag bekend gemaakt worden.

-Twee mogelijk dikke plussen dus. Grote vraag blijft natuurlijk in hoeverre de markten hun zin daadwerkelijk ook gaan krijgen. Wij zijn er nog niet zo zeker van dat er nu al wat significants gaat gebeuren. Over een tijdje is het verhaal heel anders, maar nu gaat het waarschijnlijk vooral bij verbale steun blijven. De acties komen later.

31 augustus 2007

Kees de Kort
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JACKSON HOLE, WY (MarketWatch) -- Federal Reserve Board Chairman Ben Bernanke told global financial markets what they wanted to hear: that the Federal Reserve is on the ball and prepared to act as needed to prevent the turmoil in financial markets from gathering enough strength to hurt the U.S. economy.
Bernanke said the central bank will be paying "particularly close attention to the timeliest indicators" to assess how the recent credit crisis and financial market turmoil is impacting the real economy.
Bernanke said the economy continued to expand into the summer despite the weakness in housing but "in light of recent financial developments, economic data bearing on past months or quarters may be less useful than usual for our forecasts of economic activity and inflation."
In his remarks, Bernanke repeated the Federal Open Market Committee pledge to act as needed to limit the adverse effects on the broader economy that may arise from the disruptions in financial markets.
The Fed chairman said the tightening of credit standards, if sustained, "would increase the risk that the current weakness in housing could be deeper or more prolonged than previously expected, with possible adverse effects on consumer spending and the economy more generally."
"Inevitably, the uncertainty surrounding the outlook will be greater than normal, presenting a challenge to policymakers to manage the risks to their growth and price stability objectives," Bernanke said.
He said it is not the responsibility of the Fed to protect lenders and investors from the consequences of their financial decisions, but quickly added that "developments in financial markets can have broad economic effects felt by many outside the markets and the Fed must take those effects into account when determining policy.
"Well-functioning financial markets are essential for a prosperous economy," Bernanke said.
Bernanke said the central bank stands ready to take additional steps to provide liquidity and promote the orderly functioning or markets.
One positive note was that past efforts to strengthen capital positions and the financial infrastructure "place the global financial system in a relatively strong position to work through this process," Bernanke said.
Greg Robb is a senior reporter for MarketWatch in Washington.

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we moeten de jan yen ieg in elkaar trappen :-). technische en fundamenteel door elkaar en tegengesteld aan elkaar. het wordt er niet duidelijker op.
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