If you're like me you probably watched Ben Bernanke’s performance today live on one of your monitors. I love watching the markets react to every word. Bad implication, sell off a little. Good implication, rally a little.
The trading activity today during Bubble Ben’s (copyright 2011 Steven P. Orlowski) song and dance routine was certainly not disappointing. The Bubble-Meister (copyright 2011 Steven P. Orlowski) managed to deliver a rather somber message in such a way that the stock market rallied. Hip-hip hooray for a moderate economic recovery. Just watch out for inflation, stagnant high unemployment, a dead-in-the-water real estate market and, oh yeah, if all this doesn't work then people will have to go back to school to get retrained and educated.
The proof in today’s pudding is that this is a traders' market. The only thing that Mr. Bernanke really needed to say was that QE2 was not ending early, far from it. As a matter of fact as bonds in the Federal Reserve's portfolio mature they will be reinvested, essentially maintaining the current level of accommodation. Therefore, my fellow independent thinkers, the stock market should continue to rally as it has for the foreseeable future (so the theory goes), until such time as Ben's bubble bursts or the U.S. economy somehow manages to become self-sustaining.
But self-sustaining seems like a distant possibility. A question for Mr. Bernanke regarding Ken Rogoff's book "This Time Is Different: Eight Centuries of Financial Folly," Mr. Rogoff being a friend of Mr. Bernanke’s at Harvard, suggesting that maybe we were expecting too much too soon from the recovery, which drew a criticism from Mr. Bernanke regarding Mr. Rogoff's book. The book failed to consider what happens with the right type of intervention, a la Mr. Bernanke’s Federal Reserve, was enacted. Apparently eight centuries of financial folly will be righted by Mr. Bernanke because he and his minions know better and won't repeat the mistakes of the past.
I wish him well, however I remain a skeptic. But I am a skeptic, not a fool. The trend is my friend too (and should be yours). If the Bubble-izer (copyright 2011 Steven P. Orlowski) can wave his second-hand magic wand (thanks Maestro Greenspan) at the current mess and make us all temporarily wealthier, well, who am I to not participate?
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.