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Fresh on the heels of a speech on the difficult economy made by President Bush, the stock futures were a little lower this morning. However, thanks to some positive economic data, Wall Street is moving back up after a lackluster opening bell.

Federal Reserve expected to lower interest rates today

While the Fed is expected to lower interest rates, some feel that Wall Street will not be satisfied with the predicted cut of “only” 25 basis points. Indeed, another issue that has investors disenchanted is the expectation that this will be last rate cut in the recent cycle of monetary easing. The Fed is expected to end its series of rate cuts on the premise that inflation is becoming a concern.

So, stock market investors should pay attention to the rhetoric that accompanies the Fed interest rate decision.

Positive economic data boosts stock market

The GDP reading for the first quarter beat the estimates, and the jobs data is expected to show an addition of 10,000 jobs. This is good news for an economy that has been hit by plenty of bad news in the last few months. Additionally, some of the companies reporting earnings (notably General Motors — GM) aren’t losing as much as predicted. All of this good news — in addition to the bump expected when the Fed interest rate decision is actually announced is combining for an optimistic start to the day.

Other investments

It is worth noting that the US dollar is making some headway in forex trading, especially against the euro. Some think that it may have bottomed out, and is poised to regain its strength. And oil prices dropped this morning to $115 a barrel, despite warnings from OPEC that $200 oil could be on the horizon.

Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional. All investment comes with the risk of loss.

Tags: stock market, stock market news, investing blog, Fed rate decision,
economy, investments, forex trading

This morning President Bush held a news conference to address a variety of issues, most notably the economy (but without using the word “recession“). As investors gear up for tomorrow’s expected Fed rate cut, as well as inflation data on Thursday and jobs data and Friday, President Bush assured us that measures are being taken to stimulate the economy (including the tax rebate).

The economic data, as well as the response to the president’s remarks on the economy this morning, will affect a variety of markets, from stocks to bonds to currencies to commodities. When you go to make investments, it is important that you consider economic data, as well as the rhetoric used by leaders.

President Bush addressed the issues associated with the housing market, as well as those associated with rising oil prices and with food prices inflation. A great deal of the president’s talk of the economy focused on energy costs, and ways he thinks that we can stimulate the economy by lowering energy prices.

President Bush also pressed Congress on the economy, intimating that it is the fault of the Democrat-led Congress that the economy is having problems. The New York Times reports on today’s remarks by President Bush on the economy:

Speaking at a news conference in the White House Rose Garden Tuesday morning, President Bush issued a sweeping indictment of the Democratic-led Congress, essentially blaming the sputtering economy on what he characterized as the House’s failure to propose “sensible” bills that he could sign into law. …

“On all these issues, the American people are looking to their leaders to come together and act responsibly,” he said. “I don’t think this is too much to ask even in an election year.”

While today’s remarks will likely have an effect on the stock market and other markets, it is worth noting that the Fed rate cut tomorrow, as well as worries that it will be the last for quite some time, are more likely to affect the stock market — and other markets as well.

Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional. All investment comes with the risk of loss.

Tags: investing blog, stock market, economy, stock market news,
President Bush, President Bush economy

The big news that kicked off the weekend was that tax rebate direct deposits are coming early — some people will find an addition to their bank accounts today. The question of what to do with the tax rebate is one that many people are contemplating, even if they won’t get theirs until sometime between now and July.

If you get your tax rebate today, there is still time to lock in the current rate on I-bonds. And this means that you could be well-placed for a safer, inflation-beating investment.

Investing in I-bonds

I-bonds are issued by the United States Treasury. They get their name from the fact that they are known as Series I Savings Bonds. The yield is calculated twice a year (May 1 and November 1) using a formula that includes semiannual inflation. Wisebread offers a look at the formula, as well as the implications for getting in before May 1st:

[Fixed rate + (2 x Semiannual inflation rate) + (Fixed rate x Semiannual inflation rate)]

The fixed rate is currently 1.20%, but it is expected to drop on May 1st. However, the inflation rate has gone up so the variable rate will be higher than before. If you lock into the current fix rate, it is expected that the next composite rate would be above 6%.

Even if you aren’t getting your tax rebate today, it is still possible, if you have a little extra, to consider investing in I-bonds through Treasury Direct. These can make a great addition to your portfolio, and right now, with the interest rates so low, they are handily beating even the highest of the high-yield online savings accounts. The returns aren’t exactly sexy, but right now that’s not what’s really important. Adding a little more security to your investment portfolio is.

Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional. All investment comes with the risk of loss.

Tags: investing blog, stock market investing, I-bonds, investing I-bonds,
investment portfolio, tax rebate, stock market news