In case you missed any of these catchy tunes last week, it's not too late to boogie down. Grab your headphones, CD player, iPod, speakers, guitar, cowbell -- whatever you need. It's time for another rockin' version of the Market Mix Tape.
"Stay," by Frankie Valli, the Four Seasons, and the Federal Reserve
In a unanimous vote, Ben Bernanke and the rest of the Federal Reserve's Open Market Committee decided to have the federal funds rate stay at 5.25% just a little bit longer. In a statement released last Wednesday, the members of the FOMC said that "recent indicators have suggested somewhat firmer economic growth, and some tentative signs of stabilization have appeared in the housing market." They also suggested that moderate growth in the gross domestic product will continue.
However, with economists -- who might be second only to lawyers in always being able to see the gathering clouds in the distance -- there is typically a dose of sobering news that comes with even moderately good news. Here we see that in light of continued GDP growth, the Fed is carefully watching resource utilization. As the economy drives onward and upward, competition for resources to fuel the growth could lead to inflation that's higher than desired.
In the press release, as in the past handful of releases, the Fed maintained that it may raise rates if inflation rears its head again. Expectations of a 2007 Fed rate cut have been muted in the first month of the year, and data from the Chicago Board of Trade
"The Boys Are Back in Town," by Thin Lizzy and Michael Dell
In a rather unexpected move, Dell
While there was initial excitement over the announcement, many questioned whether Mike, who was chairman of the company while Rollins was at the CEO post, could really bring the kind of fresh perspective to create the "Dell 2.0" he referenced in the press release. Of course, I'm not going to rehash what my fellow Fool Tim Beyers has already said so well.
Coverage over the weekend in The Wall Street Journal outlined a companywide email that Mike sent out giving a sort of state-of-the-union address for the company. Among other things, he said that though Dell is budgeting for higher-than-market raises, there will be no bonuses for the year and an emphasis on eliminating bureaucracy. Mike has been cited as being more charismatic and a better leader than the departing Rollins, and we can only hope that's the case if he's going to start things off by killing bonuses.
Even though I am a Dell shareholder, I remain in Tim's camp and am skeptical whether Mike will make the tough decisions that are best for the company. With current holdings of around 10% of the firm, Mike sure has the incentive to make Dell great again, but not everyone can pull off the job that Steve Jobs did at Apple
"Don't Feel Right," by the Roots and U.S. savings watchers
Last Thursday, the U.S. Bureau of Economic Analysis released information on personal income and outlays for December. Most notable in the release was that the personal savings rate, which is personal income minus outlays, was negative for the 21st straight month. The only other time the personal savings rate was as far in the red as it was last year was during the Great Depression.
The calculation of personal savings does not include any increase in the value of equity holdings -- including real estate and stocks. What it does show, though, is that people are digging into their savings, whether that means taking equity out of their houses or selling stocks, to fund their purchasing habits. As fellow Fool Seth Jayson noted in a recent article on the topic, consumer-product companies such as Coach
History suggests that even more could be at stake, as some cite the negative savings rate in the early '30s as what may have allowed the recession in 1930 to spiral into the Great Depression that lasted many more years. I'm toasting to this not being the case -- but I'm toasting with store-brand apple juice in a plastic cup, not Dom in a crystal flute.
More Foolish fun:
Fool contributor Matt Koppenheffer is currently ranked 4,604 out of 21,677 Fools participating in The Motley Fool's CAPS service, and he encourages everyone to get heard. He owns shares of Dell but of no other companies mentioned. The Fool's disclosure policy is always in tune.