BERNANKE TO THE RESCUE?
The market’s love affair with Ben Bernanke continued today as stocks rallied on the release of Bernanke’s written testimony. This was in the face of some pretty bearish news. New home sales data was very weak this morning coming in at 309K vs the expected 360K. This was a new low for home sales. It is a notoriously weak time of year for the housing market and I fully expect to see some stability in housing this Spring – particularly as procrastinating home buyers jump in before the tax credit expires. This data, however, shows what the market looks like underneath its calm surface. This is a market that is reeling and still at risk of substantial downside.
Stocks are rallying almost 1% this morning, however, as Bernanke reiterates the need for accommodative measures. Bernanke has essentially become a broken record. He is a one trick money printing pony and will reflate this economy regardless of the long-term destruction it causes. In his testimony he repeated the comments we have heard all too often. The economy is modestly recovering, inflation is benign and low rates are warranted for an extended period:
“The improvement in financial markets that began last spring continues. Conditions in short-term funding markets have returned to near pre-crisis levels. Many (mostly larger) firms have been able to issue corporate bonds or new equity and do not seem to be hampered by a lack of credit. In contrast, bank lending continues to contract, reflecting both tightened lending standards and weak demand for credit amid uncertain economic prospects.”
Source: Econoday
bernanke is making me money.
Really? Last I checked, the dollar was down 0.4% and the S&P was up a little more than that. Making money in a devalued dollar world an illusion.
better than losing money (or staying in cash) in a devalued dollar world…
there is always a bull market somewhere…i hope when the seeds of current macroeconomic discontent come into full inflation bloom in the medium term, you will have your shorts on; i intend to…
Can’t beat em. Join em. As i’ve long maintained, the Fed is going to prop up this economy until it causes the next great catastrophe.
I’ve been looking for a spot to get long here, but have to say, the market is not looking appealing here. I remain hedged for now….
don’t fight the fed.
2010 may be a good time to be in certain areas that will benefit from low short term rates and an increasing yield spread environment (thinking financials), and pursue a covered call strategy to try to goose what should be a very middling year. tight sell stops so you know the full amount of what you can lose.
or one can listen to marc faber kevetch…(but even kevetchers think a short on LT treasuries is a no brainer, so there is no shortage of positions one can take…)
also, laugh to keep from crying…
does I.B.D.’s ‘the big picture’ still say the market status is in correction?
yes
thank you for your prompt response!
Asset (PRICE) based economy is a ponzi scheme. Plain and simple.
On what green earth we have to rely on price increase to generate growth? And behind that was unlimted expansion of credit?
people doesn’t have to be a genius to know what outcome will be. There will be a time to short the fed and short them to all the way to hell.
wow, the fed and buffett both going to hell in the same day…