The US Federal Reserve yesterday pulled out all the stops in a frantic effort to save the US economy from collapse and stem the deflationary forces. The Fed funds rate was slashed from 1% to a target range between 0 and 0.25% – the lowest the central bank’s key rate has been since records began in 1954.

In reality, the Fed is simply aligning its target rate with the effective rate and thereby pushing monetary policy into an era of Zirp, i.e. a zero-interest-rate policy.

The Federal Open Market Committee’s (FOMC) statement said the “outlook for economic activity has weakened further” from its previous meeting in late October, indicating that the “Federal Reserve will employ all available

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Gold, higher in the far East on Monday, was drifting lower until the 10:00 hour, when it suddenly went vertical, adding $18 in the space of a few minutes, after which it traded mostly sideways for the rest of the day, finishing at $836.90, up $14.90 from Friday. Overnight, gold is slightly lower.

Platinum traded to $850 in Hong Kong, but that was the high for the day and, though it failed to hold a mid-morning bump similar to gold’s, it still managed to finish in the green at $835, up $12. Overnight, platinum has been flat.

Silver followed a path very similar to gold’s, but its mid-morning spike was even more impressive as it shot from $10.25 to $10.65, then held onto nearly all of its gains, closing at $10.63, up 39 cents. Overnight, silver is trending lower. (Click here for charts)

It was a solid start to the

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PRichard Russell, who lived through the Great Depression, writes the following innbsp;the November 26 issue of his newsletter, “Dow Theory Letters” …brbr‘… if the government wants to inflate in a time of deflation, and the dollar’s viability is under attack, the government could back the dollar with gold. The government could unilaterally raise the price of the gold it owns to say $5000 an ounce. The government could then say the dollar is partly-backed by gold, every dollar is worth one five thousandth of an ounce of gold. In other words, if the dollar falls under suspicion, the US might find it expedient to return to a version of the gold standard.’/P

Paulson says no to automakers…  Currencies trade in a tight range…  Richard Russell on a Wednesday!  TIC Flows improve… And Now… Today’s Pfennig!

Good day… And a Wonderful Wednesday to you! OK… Are you up on these “pirates” stories going on right now? That’s pretty unbelievable, eh? And… We are all fans of “pirates” here on the Currency Trading Desk, but these guys now are giving “our pirates” a black eye!

The currencies range traded yesterday in a very tight range, as Treasury Sec. Paulson, didn’t give in to the lawmakers and allocate $25 Billion of the TARP (Troubled Asset Relief Program) funds to automakers. King Henry said, “The rescue (read bailout!) package was not intended to be an economic stimulus or an economic recovery package. The $700 Billion TARP was designed to stabilize financial markets and the flow of credit, and it not a panacea for all our economic difficulties.”

Well… For

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Warren Buffett says buy. Jeremy Grantham says it will get worse. Both are celebrated value investors. Who is right? It all depends upon your view of the third derivative of investing. Today we look at valuations in the stock market. This is the second part of a speech I have given in the past few weeks in California and Stockholm. I am updating the numbers, as the target keeps moving. 

While from one perspective things look rather difficult, from another there is a ray of hope. What can you expect to earn from stocks over the next five years? It should make for an interesting letter. Note: this will be a little longer than usual, but part of it is there are a LOT of charts.

I likened this to the economic situation we are in now. With consumer spending “resetting” to a new lower level, we are going to have to

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After stock markets have held up bravely in the face of the credit crises and mounting economic woes, a combination of renewed concerns about the financial sector, a record-breaking spurt in the oil price, and a rotten unemployment number claimed their toll on Friday, triggering a sharp sell-off in most parts of the world.

“Today was a bona fide panic day. They threw ‘em in,” said Richard Russell, author of the Dow Theory Letters for the past 50 years. The bears were out in force, as personified by Bill King (The King Report): “The technicals, seasonals, fundamentals and financial system conditions are negative. And now the Fed

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Before highlighting some memorable quotes from market commentators during the past week, let’s briefly review the week’s market action on the basis of a few performance charts.

Global stock markets were generally higher, with the top performance coming from emerging markets – again spearheaded by China and Hong Kong – and Japan. American equities were mildly disappointing compared with global markets, with only the Nasdaq Composite Index registering a positive return.

I spend a very large amount of time reading investment-related material. In order to share some of the more interesting snippets with readers, I have decided to add a new section to the blog – Words from the Wise – where I will regularly publish a number of quotations from market commentators. The content will be updated on either a weekly or fortnightly cycle and be representative of a diverse spread of opinions.

I hope you find browsing the paragraphs as stimulating as I do in attempting to figure out the most likely direction of financial markets.

Just when everybody thought gold bullion was down and out and embarking on a downward spiral, the shine returned. Even erstwhile gold bug Richard Russell started favoring the Dow stocks over the yellow metal, but more about that later.

One of the biggest traps for the smart investor or trader is the often persuasive commentary about recent market action.