Tuesday, July 21, 2009

Quick Notes & Articles for the Day - July 21

Only a few short notes this morning as the big story is Fed Chairman Ben Bernanke's Op-Ed piece in The Wall Street Journal that is linked in our "Articles" section below.


Coca-Cola Profit Beats Estimates - Coca-Cola reported Tuesday morning that its second-quarter profit rose 43% to $2.04 billion (88 cents a share) versus $1.42 billion (61 cents) in the same period last year. Excluding one time charges, Coke would have earned 92 cents versus the analysts estimates of 89 cents. Additionally, unit case volume rose 4%. On the down side, revenue dropped about 9% to $8.27 billion.

Bernanke Testifying - Fed chairman Ben Bernanke stressed that the central bank has the tools it needs to conduct rate policy, but gave little clues how the tool would be used over the next six months. In testimony to the House Financial Services committee, Bernanke said that rates would stay at historic lows for an extended period due to low inflation over 2009, 2010, and 2011. He spent the majority of the testimony describing how the central bank was confident that it could smoothly tighten policy when needed. Bernanke also defended the Fed from Congressional critics. He asked members to reject a bill that would give the GAO more oversight over the Fed's market operations.

Bernanke stated again that the moves last fall may very well have averted a complete financial market collapse. He went on to say that The Fed sees a gradual recovery in 2010 accelerating into 2011 with high unemployment over that term.


The Fed’s Exit Strategy - By Ben Bernanke - The Wall Street Journal - "The depth and breadth of the global recession has required a highly accommodative monetary policy. Since the onset of the financial crisis nearly two years ago, the Federal Reserve has reduced the interest-rate target for overnight lending between banks (the federal-funds rate) nearly to zero. We have also greatly expanded the size of the Fed’s balance sheet through purchases of longer-term securities and through targeted lending programs aimed at restarting the flow of credit...."

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