As inflation falls below the Federal Reserve’s 2% target, regional Federal Reserve president Jeffrey Lacker says he sees no signs of imminent disinflation. In our first article this week, he and two other regional presidents discuss what measures they may take if inflation continues to decline. In other news, the Securities and Exchange Commission is looking into the Twitter hoax that triggered a temporary loss in the markets. USA Today reports on how the incident reveals the vulnerability of the financial markets. We then turn to an article by William Benz of PIMCO, one of the world’s largest investment management firms. He discusses how interest cycles affect your investment strategy and how you can prepare for future shifts in the markets. We wrap this week up with a look at gross domestic product in the United States and why it will soon grow by three percent.
Fed Presidents Remain Watchful Of Disinflation– Three regional presidents of Federal Reserve banks, Jeffrey Lacker, Narayana Kocherlakota and James Bullard, warned that persistent inflation below the Fed’s 2% target would be cause for concern. “If inflation looked like it was going to sag further on a persistent basis, I would certainly consider
stimulus for the purpose of bringing inflation up to target,” Lacker said. http://www.bloomberg.com/news/2013-04-18/three-fed-presidents-say-disinflation-may-prompt-easing.html
Twitter Hoax Reveals Financial Market Vulnerability– A false report of explosions at the White House injuring President Barack Obama sent stock prices plunging and triggered a significant but temporary loss on markets for stocks, bonds, commodities and currencies. The incident demonstrated the vulnerability of the financial system to dramatic news accounts, including false ones. The Associated Press said its Twitter account had been hacked and quickly corrected the report. The Securities and Exchange Commission is looking into the incident, said Commissioner Daniel Gallagher. http://www.usatoday.com/story/news/nation/2013/04/23/hack-attack-on-associated-press-shows-vulnerable-media/2106985/
PIMCO Describes How Investors Should Adjust Portfolios For The Future– This article by William Benz of PIMCO, one of the word’s largest investment management firms, describes the interest rate cycle over the last 20 years and how to adjust portfolios for future cycles.
http://investments.pimco.com/insights/External%20Documents/PIMCO_Viewpoint_Investors_Need_to_Pivot_PVC078.pdf
Intangible Assets Will Be Added To GDP In July– Billions of dollars in intangible assets, such as film royalties and research and development investment, will be incorporated into calculating the gross domestic product starting in July. This will make GDP for the U.S. economy 3% bigger. It will be the biggest change in the indicator since computer software was added more than 10 years ago, altering the way states calculate their GDP and the Federal Reserve measures inflation.
http://www.cnbc.com/id/100658878
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John R. Day, Bill Ennis and Stephanie Davidson