 | Backstop Ben has been out on the speaker circuit the past couple of days, this time at the periodic meeting of the Federal Open Market Committee. Of course lately it doesn’t matter who is speaking or what they are saying. The market remains committed to the slow grind higher on suspiciously low volume.
Still, perhaps it’s time for Mr. Bernanke to take his dog and pony show to the conference room at a Ramada Inn? He fits right in with the companies who lure you out to the middle of nowhere with a “free cruise” offer, only to shove some god awful time share presentation down your throat. And after you read the fine print, suddenly the free cruise isn’t really that attractive.
In today’s statement, Ben suggested that “the economy has been expanding moderately.” Supposedly, the unemployment rate has declined notably, household spending has increased, business expenditures for fixed assets have risen, inflation has been subdued, and longer-term inflation expectations have remained stable.
It’s all good and fine of course, until you examine his statement closely. The third paragraph of the news release contradicts the first sentence. It said, “The Committee decided today to keep the target range for the federal funds rate at 0 to ¼ percent and currently anticipates that economic conditions . . . are likely to warrant exceptionally low levels for the federal funds rate at least through 2014.”
If the economy is expanding at a moderate pace, there would be no need for the feds to keep interest rates close to zero for almost another three years (or longer). In fact, the closer you look at Ben’s “cruise offer”, you realize it doesn’t include airfare or drinks and you’ll be sharing your stateroom with six strangers.
How can the Fed continue its January claim that consumer prices will only rise by 1.4-1.8% in 2012? Last Friday, the Bureau of Labor Statistics reported that the Consumer Price Index rose 0.4% in February. The level was 2.9% higher than February 2011. The February 2012 increase represents an annual increase of 5.5%.
How can unemployment be falling if the Bureau of Labor Statistics reports that there are now 5.5 million fewer job holders than there were three weeks before President Obama took office, especially when you consider that the population of the US has grown from 305.5 million to 313 million in the past three years?
How can Federal Reserve Chairman Bernanke state that there is no need for inflation of the money supply just a week after the March 6 announcement of the planned infusion of hundreds of billions of dollars into the banking system?
Thanks Ben, on second glance, we’ll pay for our own vacation. Maybe we can get a great deal on a Mediterranean cruise if the Greek’s start rioting?
Trade well and follow the trend, not the so-called “experts.” Behold the age of infinite moral hazard! On April 2nd, 2009 CONgress forced FASB to suspend rule 157 in favor of deceitful accounting for the TBTF banksters.
larrylevin@tradingadvantage.com
Trading Advantage
(888) 755-3846 | 
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Trading Signals from the Electronic (ES) mini-SP 500 - No “Secret” signals filled today.
- Algorithm positions (6)
- “Reading the Tape” positions (1) …combined Secret’s, Algo, & “Reading the Tape” total… -5.25
Click Here to See Yesterday's Detailed Results | ES 1400.25 / 1396.25
POC... 1398.50
YM 13099 / 13061
NQ 2742.75 / 2733.75
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Keep a civil tongue.