Note: I am still away, hence the brief post.

Markets Sink, Soar After Fed Speaks The Fed sent investors lurching from worry to hope as it warned that the economy would remain weak for some time but said it was prepared to take further steps to shore it up. Nothing really reassuring. Only computer algos can react so violently.

Reading the bleak tone of the economic summary and outlook in the policy statement, one wonders why the FOMC did not employ more policy tools than just adjusting its language. For example, the Fed could have chosen to extend the maturity of its existing Treasury holdings. Such a move would not have changed the size of the Fed’s balance sheet but would have reinforced downward pressure on rates out the yield curve… The answer, we believe, lies in the three dissents to the policy statement as written. Richard W. Fisher, Narayana Kocherlakota, and Charles I. Plosser “would have preferred to continue to describe economic conditions as likely to warrant exceptionally low levels for the federal funds rate for an extended period.” Given the three dissents (which we have not seen since November 1992), it is possible Chairman Bernanke simply could not form enough of a consensus to do anything more, at least for now. –Dana Saporta, Credit Suisse Securities




Greek Debt Hits Commerzbank Commerzbank’s net profit plunged in the second quarter, as it wrote down its entire Greek sovereign-debt portfolio, which caused a $1.09 billion hit.

Vital Signs: Small Businesses Are More Depressed Small businesses are feeling gloomier about their prospects.

U.S. Productivity Falls Productivity, measured as output per hour of work, fell at a 0.3% annual rate in the second quarter from the first quarter, the Labor Department reported Tuesday. Revised figures showed that productivity fell 0.6% in the first quarter, down from an earlier reported gain of 1.8%.

Overheard: Insiders Buy the Swoon  Research firm InsiderScore reported Tuesday a “dramatic acceleration in insider buying” over the past few days. It noted the volume of insider buys hasn’t been so high since the market’s March 2009 bottom.  The buying suggests that more than a few insiders aren’t so worried about a double-dip recession clipping corporate profits.



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