Thursday, April 18, 2024
Miles from the Mainstream
D. R. ZUKERMAN, proprietor
The Curiously Activist Federal Reserve Board?

JANUARY 9, 2005 --

LPR assures clicksters it did not put the Lonely Pamphleteer Review Stock Index on the shelf because of concern its stocks would drop the first week of 2005.

Had LPRSI geared up for 2005, it would have ended the first week of the year Minus 326, with GE 50 cents below the December 31, 2004 close, Motorola down 51 cents, Time Warner down 55 cents and Texas Instruments down $1.70 since the December 31, 2004 close.

(Texas Instruments, 22.92 at the January 7 close was $6.46 below the December 31, 2003 close of 29.38 --a drop of nearly 22 percent.)
Over half the week's 180-point drop in the Dow Jones happened on January 4 -- the day when mid-December minutes of the Federal Reserve Board were made public,expressing inflationary concern, reportedly stemming, in part, from oil prices and the declining value of the dollar. LPR is not clear why the Fed would make public minutes three weeks old hinting at interest rate hikes.

LPR offers no opinion whether the Fed's disclosure of the stale minutes triggered the January 4 market drop. If, however, the Fed is concerned about inflationary pressures, would it be unhappy if the market dropped, devaluing the holdings of middle class shareholders and causing a lot of personal economic belt-tightening?