Testifying before Congress this week, Ben Bernanke defended the Federal Reserve’s plans to continue buying bonds at its current pace of about $85 billion per month. In an article from Bloomberg, Bernanke says he does not believe the potential risks of this policy outweigh the benefits for our economy. Next, we turn to a piece marking the one year anniversary of the PIMCO Total Return Exchange Traded Fund run by Bill Gross. Elizabeth Ody notes that it outperformed PIMCO’s Total Return Mutual Fund by five points and analyses its success. While news of the upcoming budget sequester continues to dominate headlines, there are actually three fiscal deadlines looming for Congress. With the first deadline approaching in March, Michael Townsend writes about the possible results of upcoming debates over spending, deficit reduction and the debt ceiling. We conclude this week with a summary of positive economic news in an article by Ned Davis Research.
Fed Will Stick With Bond-Buying Program, Bernanke Says-The Federal Reserve plans to continue buying bonds at its current pace, Chairman Ben Bernanke said in his testimony to the U.S. Senate banking committee. He believes the Fed’s stimulus efforts aren’t creating asset bubbles or raising the risk of inflation and went on to say, “We do not see the potential costs of the increased risk taking in some financial markets as outweighing the benefits of promoting a stronger economic recovery.” http://www.bloomberg.com/news/2013-02-26/bernanke-defends-asset-buying-as-benefits-outweigh-risks.html
PIMCO’s Total Return Exchange Traded Fund – This article in Kiplinger’s discusses the performance of the PIMCO Total Return Exchange Traded Fund (BOND) compared to its cousin, the PIMCO Total Return Mutual Fund (PTTDX). It includes comments by Bill Gross on the fund and analyses why the ETF has done better than the mutual fund in the past year. http://www.kiplinger.com/article/investing/T022-C009-S003-pimco-total-return-etf-first-year.html
Three Fiscal Deadlines Loom For Congress – Michael Townsend of Charles Schwab & Co. discusses the potential outcome of three upcoming deadlines for Congress. The first is on March 1st, with Automatic Spending Cuts potentially resulting. The next fiscal deadline is on March 27 and the third will occur this summer. http://investing.schwab.com/public/schwab/resource_center/expert_insight/schwab_investing_brief/washington_watch/three_fiscal_deadlines_loom_for_congress.html
Good Economic News Reported This Week – This issue of Macro Insights from Ned Davis Research reports on several favorable new economic indicators. It’s positive news for the economy. http://www.sim.wallst.com/schwab/alerts/reports/getReport.asp?YYY20_91g7/5MvbsPFHgFCkEt6QFL45KszIp0X/9zpQ9sXcNZjhVc8yaLMaplhP60k0G4dz6mZ7qlYNiw=&a=a
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John R. Day, Bill Ennis and Stephanie Davidson