Last week the Federal Reserve reiterated its view that the labor market remains significantly underutilized and that its exceedingly accommodative monetary policy will therefore remain appropriate for “a considerable period of time” after QE3 ends. The Fed also published its latest expectations for how quickly the fed funds rate is expected to rise once liftoff occurs, most likely in mid-2015.

As has been noted, judging by prices in the fed funds futures market, investors expect a slower pace of interest rate increases than does the Fed. And after last week’s meeting, that gap widened even further. Investors are no doubt mindful of the fact that the Fed’s own economic forecasts have been too optimistic throughout this recovery. There is agreement that eventually this gap in expectations will have to be reconciled, but so far investors are betting it is the Fed that will have to adjust.

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Although Labor Day was early this year, and a full complement of investors has been back at work for two weeks now, the week ahead is where we truly get down to business.
The big event of the week is the Fed meeting on Tuesday and Wednesday. Since there was no meeting in August, it has been some time since we last heard from the Federal Open Markets Committee (FOMC) and Fed Chair Janet Yellen directly.
This week’s meeting will be accompanied by a press conference. It also will include new economic projections. And although the August jobs report was a little soft, we are presumably just a few short weeks away from the wind down of the current round of quantitative easing, QE3.


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Just as the employment-based case of the monetary hawks was gathering momentum, along came the August jobs report to throw sand into their gears. After six straight months of job gains above 200,000--during which the number of new jobs added each month averaged 240,000--the Labor Department reported that the economy added just 142,000 news jobs in August, well below the 230,000 that had been expected. And the net job gains for June and July were revised lower by a combined 28,000. The unemployment rate fell to 6.1 percent, but the participation fell as well.

Treasury yields at the short-end of the curve dipped slightly on the news, but stocks cheered, as the S&P 500 gained 0.5 percent on Friday and ended the week at a new closing high. The implication being, of course, that the pressure on the Fed to respond to the recent rapid decline in unemployment has been relieved, reducing the likelihood of the first rate hike coming sooner than generally expected.

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Minneapolis(Sept. 4, 2014) – Ameriprise Financial (NYSE: AMP) today announced it will match donations to Feeding America® up to $500,000 now through Thanksgiving. The annual Ameriprise Financial Challenge, which kicks off every September in support of Feeding America’s Hunger Action MonthTM, makes it easy for people to double the impact of their donations to Feeding America, the nation’s leading hunger-relief organization. Every dollar donated to Feeding America through the Ameriprise Financial Challenge can help secure and distribute 20 meals to hungry families in the U.S. through the Feeding America network of food banks.
The public can join in the effort by pledging their support at
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The annual speculation about what September and October hold for U.S. stocks is well underway. Whether these two months deserve their reputation as scary for investors is certainly open to debate.

But, with vacations having ended, investors are once again focused squarely on their portfolios, and there are plenty of issues to ponder. The Federal Reserve’s quantitative easing program, QE3, winds down next month; the crisis in Ukraine threatens to deteriorate; and Europe is inching closer to deflation.

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Investor attention was focused squarely on the Federal Reserve last week. The minutes from the July meeting of the Federal Open Market Committee (FOMC), which were released on Wednesday, seemed to indicate that the debate over when to first raise interest rates is beginning to intensify.

The Fed has taken note that the rate of unemployment has fallen faster than it expected. And although the unemployment rate is only one of a range of metrics the Fed employs to determine whether it has achieved its policy mandate of full employment, it has declined close enough to what is considered full employment to raise the voices of the FOMC hawks. The Fed is currently focused on the June 2015 timeframe for the likely date of the first rate hike. But the minutes revealed a growing debate about whether an earlier date might be appropriate.

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Companies have been keeping a tight grip on their current employees. This indicates that they are seeing an uptick in their business, and are more confident in the economic outlook. This dynamic is likely to coincide with a stronger pace of hiring (which we have already witnessed over the last few months) and suggests another solid month of job growth is likely for July.

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