Friends
Dr. Bernanke provided the fuel for a nice rally in stocks and gold today as his comments this morning indicated that the Fed continues to stand at the ready. Every time you think that the Fed just has to be done providing liquidity, Dr. Bernanke assures us he will not make the mistakes that central bankers made in the 1930’s, and until the evidence is perfectly clear, he is determined to err on the side of “more is better”. Sure he acknowledges that the employment picture is getting better, but he is suspicious that it will last. One would think, intuitively, that these worries by the Fed would lead to stocks selling off as fear of a slower economy overcomes anxious traders. On the contrary, my friends. You know since December of 2008 when “helicopter Ben” first threatened to rain money upon the financial system, that we have maintained (say it with me now) “DON’T FIGHT THE FED.” Those who have engaged in such foolhardiness have been run over by a stock market that has more than doubled since March of 2009. Yes, we would like to see the economy actually run on its own, but the good Doctor just isn’t ready to take the training wheels off.
As for today, the Dow Jones Industrial Average was up a nifty 160 points to close at 13,241. The S&P 500 climbed nicely back above 1400 and finished the day at 1416 which represented a nice 19 point gain. Gold, reinvigorated by the smell of easy money, moved up $30 per ounce to close near $1692, and oil was up about $.21 to close near $107.08 per barrel WTI.
Look, we love when the stock market rises. Hey, I root for it all day long, but the continued confusion of “is bad news good news?” has done nothing but serve to keep the individual on the sidelines and missing the whole party. Yes, money continues to fly out of stock funds and into bond funds and the little guy will be caught in the wrong spot once again in the near future.
Oh well, I would like to see an improving economy, but would that be “good news is bad news?” If it means that Dr. Bernanke takes the punch bowl away, it just might. I still will root for a good economy and let the chips fall where they may in terms of stock performance. My guess is, what is good for Main Street will end up being good for Wall Street. It’s time Main Street gets its share. I feel better now.
Have a nice evening everyone.
