Is the Federal Reserve There Yet?; British Bourse Buckles as Well; The Danger of Thinking Outside of the Box… Voice Box That Is

Eagle Eye Opener

Is the Federal Reserve There Yet?  (YahooFinance)

It’s official; U.S. Federal Reserve Chairman Ben Bernanke told reporters yesterday that the government’s quantitative-easing stimulus program would end by mid-2014. Markets worldwide dipped with emerging markets taking the brunt of the blow as evidenced by the MSCI Emerging Markets index slumping more than 3.3 percent. On average, global stock prices fell some 1.9 percent and were followed by a further drop in the U.S. market. As expected, bond prices reacted with gains, led by South Africa’s 10-year yields spiking a half a percentage point in a single day. All in all, the market and investors behaved as expected after the announcement.  Now, all that remains to be seen is how individual economies around the world react. We are at the start of what should be an interesting summer.

British Bourse Buckles as Well (Reuters)

A number of companies on England’s FTSE 100 took the Fed’s news yesterday by dropping to five-month lows earlier today. This news was compounded by data from China indicating that growth of the world’s second-largest economy would continue to wane. While neither announcement was unexpected, certain sectors responded more strongly than anticipated. Precious metals, especially with mining stocks on the FTSE, for example, tumbled some 4.2 percent earlier today. Leading the way is gold-mining company Ranglold which has given back more than 7 percent as of this writing for a total of 28 percent on the year. Industry giants Rio Tinto and BHP Billiton were down more than 4 percent.  Investors will need to keep a close eye on how this news affects economies already in trouble.

Exclusive  (Relatively) Smooth Sailing through Global Market Turbulence

The Danger of Thinking Outside of the Box… Voice Box That Is (Bloomberg)

George Zimmer was fired yesterday after 40 years of leading the company he started: Men’s Wearhouse, Inc. Even if you don’t know the man by name, you certainly know his voice. It has provided the iconic, gravelly foundation for years of advertisements. While it is unclear whether his “You’re going to like the way you look, I guarantee it” catchphrase will remain a part of the company’s marketing, what is clear is that his ouster removes a huge roadblock for CEO Douglas Ewert’s plans for the company. Ewert and Zimmer clashed repeatedly about the CEO’s desire for a share buyback program and selling K&G, another brand under the Men’s Wearhouse name. Now, with Zimmer gone, investors will need to remain more alert than ever to a big move from the company, “I guarantee it.”

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The markets -- stocks, bonds, gold, and commodities -- tumbled after Ben Bernanke gave his most explicit signal yet that the Fed plans to end its easy-money policy of quantitative easing as "soon" as late 2013. Long-term Treasury bond rates rose to 3.3% and the dollar advanced on the news, while stocks fell more than 2%, and gold and silver plunged more than 5%. This response is typical overreaction by investors. It brings to mind the fall in a company’s stock price after it issues new s

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