Here are a few more eye-catching headlines from CNBC:
“If it sounds like Bernanke was dancing in his testimony, it is because he was doing figure-eights, trying to signal Fed direction.”
“Fed mulls tapering as soon as June.”
Below is a little snippet from MarketWatch:
This article focused on the response to a stupid question by one of the Congressmen on the Joint Economic Committee:
“So are you going to tighten by Labor Day?”
“After a few hems and haws, Bernanke replied that depending on the data, the rate of bond purchases could slow ‘in the next few meetings’.”
I Guess that is where CNBC got its headline; “Futures Slump…” Give me a break!!!….“Fed Threatens to Yank Stimulus Rug.”
Now Chairman Bernanke had been saying this all morning that If that data warrants, the Fed would pare QE; and, if continuing to monitor the data, it appeared that move might be premature the Fed would back off. This has been a constant theme of late. As it pertains to the above congressional inquiry regarding tightening by Labor Day, what else could he say? Uh, I don’t know. That response would certainly have inspired confidence.
The media reaction this story has, for the most part, been appalling, yet predictable…. bad news sells, even hint of bad news.
Kudos to the Wall Street Journal for getting it right on its front page this morning:
“The Fed could take a first step toward reducing the program (QE, bond buying) at one of its ‘next few meetings,’ Mr. Bernanke said, but cautioned he was reluctant to move prematurely or aggressively.” See Session 9 (“The Penn Central…And A Little Ancient History…”).
The Journal story merely implies that the uncertainty over the end of QE will, as it has been, continue.
I have made the case in the case in the past that the market would not like the eventual wind-down and reversal of QE, but this would be a positive sign that the patient (the U.S. economy) had recovered from a near-fatal heart attack back in 2008.
We have also said that the Fed will not act precipitously in order to avoid a “1937 experience” (Session 9 “The Penn Central…And A Little Ancient History…” ), as Bernanke continues to testify, “they will follow the data closely.”
Finally, I’ve said that corrections are normal and needed in a healthy stock market…regardless of the stupid reasons that the media gives to help promote them. My blog is here to combat the fear and misinformation. We hope you find tis helpful.
What do you think?
The information presented in kortsessions.com represents my own opinions and does not contain recommendations for any particular investment or securities. I may, from time to time, mention certain securities for illustrative purpose, names where I personally hold positions. These are not meant to be construed as recommendations to BUY or SELL. All investments and strategies should be undertaken only after careful consideration of suitability based on the risks, tolerance for risk and personal financial situation.