Free Stock Market Course Part 19: The Fed

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Facebook Group: https://www.facebook.com/groups/433843641082343
Investopedia Tutorial: https://www.investopedia.com/terms/f/federalreservebank.asp
Fed Website: https://www.federalreserve.gov/
Fed Covid Information: https://www.federalreserve.gov/covid-19.htm
Fed Balance Sheet: https://www.federalreserve.gov/monetarypolicy/bst_recenttrends.htm
Ben Bernanke Book: https://amzn.to/3aEu8M3
Fed Watch Tool: https://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html
Recommended Books:
End the Fed: https://amzn.to/2Xf91Nj
Fed Up: https://amzn.to/3aJZGA4
Fed Watching for Fun and Profit: https://amzn.to/3FOp9qB
The Fed and The Great Virus Crisis: https://amzn.to/3p2i0gf
Chapters
00:00 The Fed
01:19 Brief History of the Fed
03:55 Fed roles
05:18 Oversight and Reports
07:34 Structure
09:08 Net Income and Profits
12:40 Fed Assets: Balance Sheet
15:49 Independence
18:29 Current Fed Chairman
18:56 Previous Fed Chair-person
21:01 FOMC
21:37 FOMC Meetings
23:29 Market Impact
26:13 Fed Announcement
27:11 Fed Announcement Day +1
27:53 Fed Funds Rate
29:06 Fed Funds Rate and the SPX
32:57 The Fed and Other Important Banks
34:01 Recommended Books
Module 3 Section 11
The FED
The Fed Reserve System is the bank of the US government. Regulates financial institutions.
The Fed is one of the most influential organizations on earth.
The Fed dictates economic and monetary policies.
Brief History
Created in 1913 by the Federal Reserve Act.
Response to a severe panic in 1907.
Roles and responsibilities have expanded and evolved.
Fed Roles
The U.S. Congress established three key objectives:
1. Maximum employment,
2. Stable prices, and
3. Moderate long-term interest rates.
Oversight & Reports
Supervising and regulating banks,
Maintaining the stability of the financial system, and
Providing financial services to depository institutions, the U.S. government, and foreign official institutions.
Beige Book
Structure
The Federal Reserve System's structure is composed of:
A Presidentially appointed Board of Governors that is also called the Federal Reserve Board (FRB),
Partially presidentially appointed Federal Open Market Committee (FOMC),
Twelve regional Federal Reserve Banks located in major cities throughout the nation,
Numerous privately-owned U.S. member banks, and
Various advisory councils.
The FED Regions
Net Income and Profits
The US Government receives all the FED’s annual profits.
Quantitative Easing (QE) 2008-2014
Tapering 2015
2020. Due to COVID-19, The FED has lowered interest rates and is implementing QE as well as purchasing Corporate Bonds.
Fed Assets
Independence
However, President Trump is the first president to criticize the actions of the FED.
Current FED Chairman
Jerome Powell (2018- )
FED Chairman
Janet Yellen (2014-2018). Current Treasury Secretary.
FED Chairman
Ben Bernanke (2006-2014)
FED Chairman
Alan Greenspan (1987-2006)
FOMC
The Federal Open Market Committee (FOMC) sets monetary policy.
Members consist of:
7 Board of Governors.
12 regional bank presidents.
Private and public components
FOMC Meetings
The FOMC holds eight regularly scheduled meetings during the year and other meetings as needed.
Minutes released three weeks later
Market Impact
FOMC Meeting announcements. Action or inaction.
The stock market anticipates the Fed will take a specific action. If that doesn't happen, it can cause chaos.
The Fed controls key interest rates and its actions can have a direct impact on the stock market.
Speeches by Fed Members.
The Fed Funds Rate
The Fed Funds Rate is the overnight lending rate between high-quality banks.
The federal funds rate is one of the most influential interest rates in the US Economy, since it affects monetary and financial conditions, which in turn have a bearing on key aspects of the broad economy, including employment, growth, and inflation.
The Federal Open Market Committee (FOMC), which is the Federal Reserve’s primary monetary policymaking body, telegraphs its desired target for the federal funds rate through open market operations- also known as the “fed funds rate.”
The Fed and Other Important Banks
For US Investors, the Fed has always been the main focus concerning interest rates.
Over the last few decades, global influences now have a more significant impact on US Markets.
It is necessary to follow the actions or inactions of other banks outside of the US, which include:
European Central Bank (ECB) which sets monetary policy for the EU.
Bank of Japan which sets monetary policy for Japan.
Other banks outside of the US are important, but currently, the Fed, ECB, and BoJ are the main players.
Books
There are interesting books that criticize as well as justify the FEDs existence.