Friday Outlook: 'Helicopter Ben' Unimpressive Thus Far

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I know we’re saying negative things about bonds but it may surprise you to learn we have long positions in IEF and SHY. Why? Because we “must” cover them technically for investors who “must” own them.
















That’s a wrap for today and perhaps the month of February. Bernanke clearly has his work cut out for him. Thus far I can’t say I’m impressed with his performance despite the poor hand he’s been dealt.

Aside from the obvious commodity plays working so well, there may be a new group of Four Horsemen to take the lead as far as “stock-based” ETFs are concerned. They would consist of SLX, MOO, GDX and perhaps XLB. We’ll be talking about these over the weekend and beyond. By the way, CALPER's is discussing lifting their commodity allocation by roughly $7 billion. While that may be small change to the overall portfolio, it’s a big amount for those markets.

Quote of the day: “There is still hope that the ‘recession’ is substantially contained in the financial, housing, retail, auto, and airline sectors.”
- 24/7 Wall St.

We all make dumb statements, me included.

Have a great weekend!

Disclaimer: Among other issues the ETF Digest maintains long or short positions in SH, PSQ, MYY, RWM, GLD, DBC, DBB, DBS, DBA, DBE, UNG, IEF and EWZ.

Comments

[britishsteel]

google bernakes speech to the economics club in 2002 and read it, its entitled deflation I think . So far everything he stated in that speech and mind you in 2002 inflation was the problem not deflation was a plan on how to combat it and so far all that he layed out as far as steps to take have been used to no effect and we are getting close to his zero overnite rate which along with his plan of taking dollars out of circulation BUT NOT UNTIL IT HITS ZERO will cause that 20% interest rate and dow will not bet at 20,000. also in 2004 he said

Bernanke and Reinhart (2004) discuss three alternative, though potentially
complementary, strategies when monetary policymakers are confronted with a short-term
nominal interest rate that is close to zero. As discussed in the introduction, these
alternatives involve (1) shaping the expectations of the public about future settings of the
policy rate, (2) increasing the size of the central bank’s balance sheet beyond the level
needed to set the short-term policy rate at zero (“quantitative easing”); and (3) shifting
the composition of the central bank’s balance sheet in order to affect the relative supplies
of securities held by the public. We use this taxonomy here as well to organize our
discussion of non-standard policy options at or near the zero bound.

now #1 states shaping the expectations of the public on policy settings? How through mass media like kuntlow and cnn hypnosis by media? Bond market sets rates not the feds


# 2 increasing balance sheet of central banks? how they gonna do that? Print more worthless money?


#3 shifting the balance sheet in order to affect the relative supplies of securities held by the public? which means making them the bagholders?

we all got a lot of thinking to do lol

[Thesmothete]

Do you chart municipals, e.g., MUB?

[David Fry]

Funny you should ask since I was a muni bond principal many years ago. I haven't charted MUB since the issuer has NOT provided lengthy historical data to make doing so meaningful.

[fAT]

On the edge of sleep
I heard voices behind the door
The known and the nameless,
familiar and faceless
My angels and my demons at war
Which one will lose - depends on what I choose
Or maybe which voice I ignore