Moment to moment
The title of my article today may have a familiar ring but, maybe, you just can’t thumb it.
For those old enough then to watch movies with their “ideal BFFs” when it was shown, it should ring a bell, for it was the title of two Hollywood love-story movies.
My column, however, does not have any of the supposed torrid plots attached to these movies except for their enigmatic element of heavy drama.
For a trip back to memory lane, the first movie of the said title was released on Dec. 31, 1965. It was a film directed by Mervyn LeRoy, starring Jean Seberg.
Described in reviews, the movie was about a married woman who had an affair which led to murder.
The movie was a classic as it exquisitely presented how love could be in the following dramatic characterizations: “Every woman has a moment of weakness; every man has a moment of hunger; every love has its moment of terror.”
The second movie was actually entitled “Moment by Moment.” It was a film starring John Travolta and Lily Tomlin, written and directed by Jane Wagner.
The plot was about “a romance between a young drifter named Strip (John Travolta) and an older wealthy woman, Trish Rawlings (Lily Tomlin).” The film was released on Dec. 15, 1978. Unfortunately, the movie did not pan out.
The theme songs for both movies became hits. This was despite the poor showing of the 1978 film.
The first was composed by the great and then fabulous Henri Mancini and made famous by Frank Sinatra in his stage repertoires.
The theme song of the second movie became “a considerable hit for singer Yvonne Elliman in 1979,” collaborative reviews reported.
New developments
Due to the lingering unpredictability of the market out of the financial meltdown arising from the subprime mortgage crises in 2008, most investment decisions by investors had been limited to “moment-to-moment” basis, so to speak.
This was complicated by the investors’ distorted appreciation of positive data as negative, too. This was first observed in American investors’ attitude and later seen in the behaviors of those in other markets like ours.
For instance, encouraging economic growth data in the US like less jobless claims and improvement on home sales were received with apprehension than gladness. US investors were held hostage by the fear that while there were indeed signs of advances in the overall state of the US economy, business might not yet be ready this soon for the tapering of the stimulus program.
With the US economy and Wall Street as the world’s largest economy and market, they had by no means overwhelming weight in the ultimate outlook of investors in other free markets around the globe.
More recently, however, investors’ had slowly become not just more normal but long-term in outlook as they began to accept positive news as actually good.
Last Friday, in particular, Wall Street rose to another high, extending the historic record rise of its major indices. This was certainly the result of the new mindset of investors in accepting positive developments into good news—the gross domestic product (GDP) of the US grew to 4.1 percent in the third quarter.
As reported, this “was the fastest pace of growth in almost two years” by the US economy. It also exceeded the 3.6 percent earlier estimated by a large pool of economists.
In this connection, the US Federal Reserve had also already decided that it will start to taper the stimulus program. As generally laid out, it will reduce its bond buying program by $10 billion or reduce its bond-buying to $75 billion from $85 billion by January and will continue to do so in the same increments over the next seven meetings before ending the program in December 2014.
The US Federal Reserve, particularly the Federal Open Market Committee or FOMC, meet at least four times a year in Washington D.C., as mandated by law.
However, since 1981, the FOMC was said to have been meeting yearly at intervals of five to eight weeks. This has made the FOMC to meet at least eight times each year.
Members, on special meetings, can be further called to personally attend or participate through telephone conference to deliberate and vote—even by proxy—on a proposed action matters.
Attendance in regular meetings is “restricted to committee members, non-member Reserve Bank presidents, staff officers, the manager of the System Open Market Account, and a small number of board and Reserve Bank staff.”
Bottom-line spin
What makes the move by the US Federal Reserve positive and welcome is the flexibility in the execution of the taper plan. As stated by Fed Chair Ben Bernanke, “it will not pull back too soon.”
Incidentally, the plan will also provide the Fed’s policy for the next two years, at the same time, define the first two terms of his successor, Janet L. Yellen.
He also gave assurance of the agency’s intent to hold short-term interest rates to near zero “until near the end of 2015.”
Accordingly, the Fed “will likely keep interest rates low ‘well past the time’ that the jobless rate falls below its target of 6.5 percent,” the level that the US economy to have as its normal low in 2015.
Particularly for the intent to hold down interest rates low, critics are fully elated for they have always regarded it as “the more powerful means of stimulating growth.” To them, the intended move would revive risk-taking that leads to true economic productivity and corporate profitability.
With these new initiates to manage the US economy—and, thus, the world economy—the market outlook for 2014 will remain bullish, according to experts.
But to expect another historic performance next year, experts said that “might be asking too much.” To them, the market for 2014 will be “less than what we’ve seen over the past couple of years.
With this as next year’s prognosis, let’s explore next time the investment strategy that might guide us to have a year that is better than anticipated.
(The author is a licensed stockbroker of Eagle Equities Inc. You may reach the Market Rider at [email protected] , [email protected] or at www.kapitaltek.com
