Role Reversal: Barry Bonds Homers, Bernanke Strikes Out
Yesterday's FOMC Policy Statement will go far in damaging the credibility of Ben Bernanke's Federal Reserve, in our view. After the Fed turned its back on the market, we expect it should not take long before severe correction. The next bit of news arising about investment banks in trouble or housing or lending bankruptcy, without market confidence that the Fed is there to support things, should drive collapse.
This was not a choice between helping rich hedge fund managers or not, it was a choice to provide stability to the market. Stocks have risen even after the Fed's ignorance, because the market views the Fed as all knowledgeable. If the Fed doesn't see a problem worth acting on, then equity investors read into the inaction that the problem must not be threatening. However, it is. In the months that follow, confidence lost in this Fed could lead to an early retirement for Mr. Bernanke. Please find our "Key Headlines" section below.
ESPN: Bonds Breaks Home Run Record
Federal Reserve: FOMC Policy Statement
CNN Money: Bernanke Strikes Out, Fed Kept Rates Steady
Bloomberg: Bernanke Setting His Own Path
USA Today: Mortgage Applications Rise on Rate Drop
Telegraph: Low Level Chinese Officials Threaten Liquidation of U.S. Treasury Holdings
Financial Times: Russian Tycoon Buys GM Stake
Bloomberg: China Faces Food Inflation
CNBC: Oil Prices Drift Lower Before Inventories
Yahoo! Earnings Calendar
CNN Money: Toll Brothers (NYSE: TOL) Sees Revenue Drop
USA Today: Mattel Identifies Bad Chinese Vendor
Forbes: Cisco (NASDAQ: CSCO) Profit Up 25%
AP/Yahoo!: Leap Wireless (NASDAQ: LEAP) Earnings Fall
AP/Yahoo!: McDonald's (NYSE: MCD) July Same-Store Sales Up 6.5%
AP/Yahoo!: Hansen Natural's (NASDAQ: HANS) Net Rises
BBC: Koreas' Historic Summit
Economist: Countdown to Olympic Games
Iran Daily: Tales from the Dark Side
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posted by The Greek | 8:59 AM
3 Comments:
You are way off the mark this time. Bernanke got it exactly right.
Wall Streeters have to be the most arrogant, narcissistic people on the planet. I've heard plenty 'gurus' in the media castigate the Federal Reserve for holding firm as if the Fed exists to keep the prices of equities elevating.
The Fed has a dual mandate, and keeping the prices of stocks high is not one of those mandates.
Stabilization of equity markets is just a side effect of stabilizing liquidity in the financial system. I keep hearing, "the subprime problem is contained." Yes, but look ahead a couple weeks please! Is that how we live life? I don't have to wear my seatbelt because the road is clear? The road up ahead is treacherous. By supporting liquidity, the Fed supports not only the stock market, but the economy and entire financial system.
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