Market Ends Three-Day Rally: Stocks ended Wednesday trading lower, despite a decision by the Federal Reserve to keep its bond-buying program in place. The Dow Jones industrial average (^DJI) fell 206 points, while the S&P 500 (^GSPC) lost 23 points and the Nasdaq (^IXIC) gave up 39.
The Fed said it will maintain the pace of its bond purchases -- $85 million a month -- for now, even as it offered a more optimistic outlook for the U.S. economy and job market. In a statement, issued after the Fed's two-day policy meeting, the Fed said the economy is growing moderately, and that the risks to recovery it warned of last fall had diminished. The Fed also forecast that the nation's jobless rate would fall to 7.2-to-7.3 percent by year's end and drop as low as 6.5 percent by the end of 2014.
In earnings news, FedEx (FDX) reported its fiscal fourth-quarter profit tumbled 45 percent even as the delivery company beat earnings expectations. What's more, the company's forecast for the next 12 months was shy of Wall Street forecasts, but shares ended the day higher, up more than 1 percent to $100.54.
George Zimmer, founder and longtime spokesman for The Men's Wearhouse (MW) is out of a job. The Fremont., Calif.-based company early Wednesday issued a terse statement announcing Zimmer's departure but offered no clue as to why it had fired the executive chairman. Zimmer shot back, telling CNBC that he was fired after he expressed concerns to the board about the company's direction and that the board "inappropriately has chosen to silence my concerns."
Securities and Exchange Commission Chairman Mary Jo White is taking a stronger stance against wrongdoers, saying the SEC will now demand admissions of wrongdoing in cases involving serious fraud or harm to investors, and where "it's very important to have that public acknowledgement and accountability."
A court in Milan has convicted designers Domenico Dolce and Stefano Gabbana of tax evasion, for failing to declare $1.3 billion in income to authorities. The court handed both men a suspended sentenced of 20 months in jail. Neither Dolce nor Gabbana were present in the court. Both executives have denied the charges, which had been thrown out two years ago by another judge. A spokesman for privately held Dolce & Gabanna declined immediate comment, Reuters reported.
Watch for more earnings Thursday, as Kroger (KR), Pier 1 Imports (PIR) and Rite Aid (RAD) are all due to report before U.S. markets open. After the closing bell, watch for earnings from Oracle (ORCL).
On the economic calendar, there are several key reports due Thursday, including existing home sales, weekly jobless claims and leading indicators.
What the experts say: "The cost of college textbooks has been rising at almost twice the rate of general CPI inflation for at least the last 30 years," according to Mark J. Perry, American Enterprise Institute. "As Glenn Reynolds reminds us, 'a process that cannot go on forever, won't,' and the college textbook bubble is certainly one of those processes."
Warning stat: First tier cities Beijing and Guangzhou saw home prices rise 3.1 percent in February, the biggest jumps in the country. Meanwhile, entire towns will go up in China with no inhabitants. These are China's notorious "ghost cities."
Warning stat: The "crypto currency" now trades at $63 -- double what it was at the beginning of March.
What the experts say: "In hindsight, the people who bid the price of Bitcoins up to $30 in 2011 may not have been so crazy after all. It just took the broader market, including me, a couple of years to catch up with them," according to Ars Technica's Timothy B. Lee.
Warning stat: Investors recently bid a record $3.16 for each dollar of the $2.011 trillion in bonds the U.S. government auctioned in 2012, Bloomberg says.
What the experts say: "Long-term interest rates are now unsustainably low, implying bubbles in the prices of bonds and other securities," warns economist Martin Feldstein. "When interest rates rise, as they surely will, the bubbles will burst, the prices of those securities will fall, and anyone holding them will be hurt."
Warning stat: American farmland prices continue to grow at a blazing hot double-digit rate. An industry group recently forecast that values could surge 15 percent to 20 percent in 2013.
What the experts say: "It doesn't have all the hallmarks of a bubble," according to Robert Shiller. "One of them is most people have never heard of it. In my view of a bubble, it's something that gets people excited. Well, some people are excited, but most people don't even know about it."
What the experts say: "The real question in my mind is, 'Are we possibly off to the races again?'" asked economist Robert Shiller. "I think in cities like Phoenix and San Francisco, we might be seeing something pretty big developing. People there are very speculative-minded."
Warning stat: Health care spending has grown 2.5 times faster than incomes over the past 30 years.
What the experts say: "The health care system in the U.S. reminds us somewhat ominously of the bubble in housing finance, a 'public/private partnership,'" says Citi's Steve Wieting. "Housing consumption still receives strong tax preferences, as does health insurance (reflecting underlying health care consumption). Most aptly, prior to quasi-nationalization, housing GSEs earned private profits from public subsidies for housing, as do U.S. health care providers."
Warning stat: Europe stabilized after ECB president Mario Draghi said, "Within our mandate, the ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough."
What the experts say: "To us the key word about the post summer 2012 Euro Area asset boom is that most of it is a bubble, and one which will burst at a time of its own choosing, even though we concede that ample liquidity can often keep bubbles afloat for a long time," warns Citi Chief Economist Willem Buiter.
Warning stat: Prices are up 47 percent year-over-year, and are sitting at an 8.5 year high of $432 per 1,000 board fee.
What the experts say: "Signs of a housing bubble in the world's most populous nation may force the Chinese government to take measures to 'draw air' out of the rising housing market and to clamp down on construction lending, which would likely put a significant dent in the demand for building materials such as Lumber and Copper," according to Mike Zarembski, OptionsXpress.
What the experts say: Jeff Gundlach notes that not only have wages not increased commensurate with tuition inflation, wages have actually been falling. "What have all these soaring tuition costs got you?" asked Gundlach rhetorically.
Warning stat: Craft beer production surged 15 percent year-over-year in 2012.
What the experts say: Boston Beer Co. founder Jim Koch says most stores have reached their limit for carrying new breweries, and that too many breweries are making similar beers without adding anything to the market.
Warning stat: Canadian home prices mirrored the U.S. housing rally. However, Canadian prices never fell. A recent Canadian Housing Affordability study says the country's home market is 10 percent overvalued.
What the experts say: "I worry that what is happening in Canada is kind of a slow-motion version of what happened in the U.S," said Robert Shiller.
What the experts say: "What we find is that Bernanke does not have nearly as great a track record on inflation as he thinks he has. Greenspan could not see that the housing market was an inflated bubble. Evidently Bernanke cannot see that the stock market is an inflated bubble."