The Fed spiked the punchbowl instead of removing it and Wall Street roared ahead. It did this by not specifying more clearly when interest rates will start to rise. instead of promising to keep rates at zero “for a considerable time”, the US central bank said it “can be patient in beginning to normalize the stance of monetary policy.”
It also ordered delayed imposition of the Volcker Rule which is intended to separate the insured role of banks as deposit-takers from the public with their often high-risk underwriting and hedging activities. The rule is named after Paul Volcker who wiped out US inflation with awful high interest rates during the 1970s before the New Deal separation of commecial banking and investment operations was undermined by free-market enthusiasts.
Defending the sales of Swatches and chocolates, the Swiss central bank imposed a 0.25% CHARGE on bank deposits.
Germany's BASF extracted itself from a complex deal with Gazprom whereby it was supposed to replace Wintershall in a new exploration program in Siberia. Even in Germany, Russia plays are being reexamined for fear of becoming a target as Putin wraps himself in the flag and accuses foreigners of bringing the country into what he insists is not a crisis. We sold BASFY not over this new development but simply because I worried that it could not get its petrochemical feedstock at competitive prices against US shale oil.
*To start with everything went up but 3 shares went ballistic. Our CUBA (formally Herzfeld Caribbean Basin), a closed-end fund, is up about a third after the end of the Cuban embargo and the resumption of diplomatic relations by Washington. The fund aslso announced a 0.635 cent special dividend of which only 0.039 cents is short term. The managers picked up 15.41% new shares in the recent rights offering. The margin cost of shorting CUBA was raised by 100% by my e-trade broker. It has taken long enough.
*Also up sharply is Ecopetrol after the government-controlled board announced that it was hiring a head-hunting firm (unnamed) to seek a new CEO. Presumably this will lessen the likelihood of a crony being named by the Bogota govt. Looking for experienced Latin American oil executives who need a new job, the head-hunter might search across the border in Venezuela. EC rose 8.4%
