JPMorgan Has New Theory About What Really Caused the Flash Rally

Some 16 months after the “flash rally” in U.S. Treasuries blindsided Wall Street traders, little about what exactly went wrong has been resolved. The most common, albeit tenuous, explanation is that the futures market seized up that morning, creating a spillover effect into cash bonds that led to a frenetic 12-minute spike in prices. JPMorgan Chase & Co. analysts are now advancing a new theory, one they contend is a key to how to trade most effectively in today’s volatile Treasuries market. The problems on Oct. 15, 2014, actually began in…

Economists React to the Fourth-Quarter GDP Report: ‘Less Than Meets the Eye’

The U.S. economy expanded at a 1% rate in the final three months of 2015, better than a previously reported 0.7% gain, the Commerce Department said Friday. Here’s what economists had to say. “In short, the details of the upward revision to GDP were negative, with inventories less of a drag than before. That probably means more of a drag going forward at some point. Overall, though, the report is unlikely to affect forecasts significantly. Data available so far for the first quarter suggest a pickup from the 1.0% overall pace, even if inventories are still…

Don’t Panic Over Falling Inflation Expectations

Alarms are ringing over how much expected inflation has fallen in recent months. Bond markets are betting that five to 10 years from now, inflation will be roughly half the Fed’s 2% target. The University of Michigan reports on household expectations today; its last survey found long-term expectations hit an all-time low earlier this month. This has unsettled some Federal Reserve policy makers and many outside analysts, because low expectations can be self-fulfilling. It’s fueled calls for the Fed to stop raising rates, or even cut them. But the drop may be misleading: It is heavily driven by…

Stocks Rise After Fourth-Quarter GDP Revised Higher

Stocks moved higher on Friday after the latest data showed fourth-quarter growth in the U.S. economy wasn’t as bad as feared. The S&P 500 was up 0.38%, the Dow Jones Industrial Average added 0.39%, and the Nasdaq rose 0.72%. The second estimate of fourth-quarter GDP was revised up to an annual rate of 1% from 0.7%, suggesting that the U.S. economy was in better shape than expected to close out last year. Economists had expected GDP to be revised down to 0.4% growth. A stronger U.S. dollar and an inventory buildup continued to hurt manufacturing, though, with exports…

Before the market opening

6 things about stocks you need to know before the market opening It’s shaping up to be a feel-good Friday. U.S. stock futures are pointing up and nearly all global markets are posting strong gains. Here are the six things you need to know before the opening bell rings in New York: 1. Calm in China: Chinese stock markets were calm Friday following a sharp, unexpected drop on Thursday. Investors may have been placated by comments from the head of China’s central bank, Zhou Xiaochuan, who said the central bank still has the ability and…

5 things to look for in Warren Buffett’s annual letter to investors

It’s time for another eagerly anticipated epistle from the Warren Buffett. Berkshire Hathaway BRK.A, -0.15% BRK.B, +0.03%  will release its annual report at around 8 a.m. Eastern Time on Saturday, but the main draw will be the annual letter to shareholders from Buffett, the firm’s chairman and chief executive. This will mark the 51st year Buffett, 85, has written a letter to Berkshire investors. His track record — combined with his folksy ability to explain his investment philosophy, long-term strategic decisions and even his biggest regrets — have made the letters a must-read for investors and…