There are a couple of things going on here. First, a changing of the guard: Janet Yellen is set to succeed Ben Bernanke as chair of the Federal Reserve. Next, an improving economy: employment numbers have been surprisingly good as of late, pushing unemployment down to 7% recently. Lastly, lots of unease and lack of clarity: investors have been skittishly anticipating the end of the monetary stimulus provided by the Federal Reserve.
All of these things came together yesterday in possibly the most exciting monetary policy story since quantitative easing started.
Quantitative easing (QE), round infinity, the latest of the Federal Reserve's monetary stimulus, consisted of $85 Billion of purchases of long term bonds and mortgages. This held long term interest rates down, ostensibly to encourage long term investment. A possibly unintended side effect was to assure anyone holding or buying bonds that their prices would keep going up for a little while. The investor uncertainty around QE has been the speculation over when and how it would end, or taper off.
More information came to market yesterday when the Fed announced that they would start to reduce purchases to $75 Billion a month next month. This is not a huge reduction, but the timing is a great relief for a few reasons. Firstly, this frees Janet Yellen of the pressure of continuing the full scale purchases. With so much institutional momentum behind QE, it is a relief that the brakes are already being applied, if only tapped lightly. Second, since the tapering of QE was supposed to be based on the health of the economy, this is a good omen - the Fed believes that the economic trends will support the withdrawal of stimulus. Lastly, investors now have an extra crumb of information when analysing investments. The question of when reductions would happen is off the table, we get to speculate on everything else now!
Independent, Fee-Only Financial Advisor
Thursday, December 19, 2013
Thursday, December 05, 2013
Flying Mississippi!
We flew to Philadelphia, Pennsylvania for Thanksgiving. Philly is the home of the cheesesteak sandwich, Independence Hall, and the Flyers. More importantly, it's the home of my daughter.
Flying from the Jackson International Airport is a chore. There are no through flights. The options for carriers and schedules are limited. Usually, we end up on Delta. Of course, that means we have to travel through Atlanta.
Jackson's airport is small. The agent at the counter may also be the one at the gate. I've wondered if they also have to load the luggage and fill up the plane with fuel. Mainly, it's a one man show.
On the way back home, we went back through Atlanta. The flight from Philly to Atlanta was a little late taking off. The pilot said something about maintenance issues. That caused my ears to perk up! Couldn't we just change planes? After some time spent on the runway, we ascended. My perked up ears heard a high-pitched sound. I started saying my prayers before I realized there was a dog on the plane!
The yapping and crying lasted most of the flight. Good grief! We couldn't wait to get on the flight to Jackson where we could have some peace and quiet. Then I started hearing something. No, it couldn't be! Across the aisle from me was a passenger with a cat under his seat! He sheepishly apologized for the meowing. And I thought flying with kids was bad!
We made it home, glad to be back in Mississippi. We love home, but we love to travel. Despite its difficulties, air travel is really the way to go, so I was quite disappointed to hear the news today.
Southwest Air will no longer service Jackson. Yet another one bites the dust. We are left with so few options to get OUT of Mississippi that it makes staying here and doing business here difficult.
Mississippi is a small state. We are not a wealthy state. I understand that airlines have to make business decisions based on profit potential, but we NEED more options. It's time for our state government to step in and offer subsidies to support air travel to the Capitol City.
Business packages are put together all the time to encourage development in our state. Why not do this for air travel? It's the link that connects us so that other business happens. Surely, such an expenditure could be easily justified.
We could even request the planes have a Magnolia on the side. Mississippi Air-- now THOSE are some friendly skies!
Flying from the Jackson International Airport is a chore. There are no through flights. The options for carriers and schedules are limited. Usually, we end up on Delta. Of course, that means we have to travel through Atlanta.
Jackson's airport is small. The agent at the counter may also be the one at the gate. I've wondered if they also have to load the luggage and fill up the plane with fuel. Mainly, it's a one man show.
On the way back home, we went back through Atlanta. The flight from Philly to Atlanta was a little late taking off. The pilot said something about maintenance issues. That caused my ears to perk up! Couldn't we just change planes? After some time spent on the runway, we ascended. My perked up ears heard a high-pitched sound. I started saying my prayers before I realized there was a dog on the plane!
The yapping and crying lasted most of the flight. Good grief! We couldn't wait to get on the flight to Jackson where we could have some peace and quiet. Then I started hearing something. No, it couldn't be! Across the aisle from me was a passenger with a cat under his seat! He sheepishly apologized for the meowing. And I thought flying with kids was bad!
We made it home, glad to be back in Mississippi. We love home, but we love to travel. Despite its difficulties, air travel is really the way to go, so I was quite disappointed to hear the news today.
Southwest Air will no longer service Jackson. Yet another one bites the dust. We are left with so few options to get OUT of Mississippi that it makes staying here and doing business here difficult.
Mississippi is a small state. We are not a wealthy state. I understand that airlines have to make business decisions based on profit potential, but we NEED more options. It's time for our state government to step in and offer subsidies to support air travel to the Capitol City.
Business packages are put together all the time to encourage development in our state. Why not do this for air travel? It's the link that connects us so that other business happens. Surely, such an expenditure could be easily justified.
We could even request the planes have a Magnolia on the side. Mississippi Air-- now THOSE are some friendly skies!
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