This Week’s News:

US: The S&P 500 was up 0.1% on the week and 4.7% year to date.

Europe: The Euro Stoxx 50 was up 0.4% on the week and 5.1% year to date.

China: The Shangahi Index was up 4.8% on the week and 5.1% year to date.

Gold: Gold (as measured by GLD) was up 4% on the week and 8.4% year to date.

It looks like all markets have been off to a nice start.

Quick World Summary

In the U.S., GDP grew a bit less than the market expected. Italian and Spanish bond yields continue to fall (meaning that people find those countries less risky since the ECB stepped in). However Spanish unemployment rose to 23% and Italian confidence hit it’s lowest level since the survey began.

It would appear that while the ECB is trying to create a necessary, but temporary, band-aid– deep problems in the Euro-Zone still exist.

What Was the Big News on the Week?

The Federal Reserve (the U.S. Central Bank) made a big announcement this past week. They stated that they were going to hold the Federal Funds Rate at zero until the end of 2014.

Why Did They Do That?

The Central Bank in the United States (The Fed) has a mandate unlike any other one in the entire world. They are to promote both full employment and inflationary stability. All other Central Banks globally focus just on inflation. This unique role of the U.S. Fed is called—the dual mandate (note: we thought we were pretty clever here).

So, as a result of this dual mandate, the U.S. has been behaving a bit differently than the rest of the world’s Central Banks. Why?

Other Central Banks aren’t moving too much. Why? Inflation across the world is already, broadly, within the a Central Banker’s comfort zone. In the U.S. it is at about 3%. So, to a ‘normal’ central bank, that would mean—do nothing.

However in the U.S. Unemployment is still high. And because of that the Fed is still taking action. The action in this case is keeping interest rate very low. For more on various types of rates, read here: The Rates: Fed Funds, Discount and Prime.

What Effect Does this Have?

This has an effect upon all types of markets.

Rates: This can help keep mortgage rates and other borrowing rates low.

Investments: This keeps your investments in bank checking accounts earning practically 0%. This keeps bond yields very low—so you are not paid as much to own bonds today. A move like this tries to push investors into riskier assets.

The Dollar: This weakens the value of the U.S. Dollar, which fell this week.

Gold:  Gold is sometimes viewed as a substitute when people don’t want to hold paper money. So in moves like this, Gold rises.

Don’t Stress – Do Yoga in the Airport

San Francisco strikes again! They opened a yoga room in SFO for frazzled travelers, nervous flyers and people who just need to stretch.

We, at Bull & Bear, are thrilled and can’t wait to get in there. Check it out.

Do some free yoga classes while you’re in there with our favorite, Yoga Today- filmed in Jackson Hole.

Love Bull & Bear? 

If you have friends who would like us, have them sign up here!

Also… we not only tweet, but we collect friends.