On the topic of respect, Ben Bernanke is feeling a little heat, and he has come out swinging. His op-ed in the Washington Post yesterday was rambunctious, and carried over nicely from the tough-kid-makes-good image he portrayed in his "60 Minutes" interview (more like infomercial). He stated how concerned he is about "legislative proposals" being circulated. He is very worried about the repeal of the 1978 provision that was intended to protect monetary policy from short- term political influence. And, of course, comparisons to the Great Depression were made since Bernanke is not only a scholar on the topic but also saved the economy from entering into one. Sure, there was something near a mea culpa, but saying the Fed messed up "like other regulators around the world" is precisely the reason I think there needs to be greater supervision. This isn't like demanding Tiger Woods to fess up, this involves the American economy, and to say we just did what everyone else did leads me to believe there should be some accountability and outside pressures.
The Fed answers to nobody right now, has all the power in the world to get it wrong, and in the process ruin the lives of hundreds of millions of people. That's no laughing matter. The Bernanke confirmation period is going to be tough, but the outcome is a forgone conclusion. Still, the crowd is going to be tough as a leftist like Bernie Sanders (I-VT) will join fiscal hawk Ron Paul (R-TX) and desperate politicians like Chris Dodd (D-CT). But, like so many things in Washington, it's going to be a big show with all the histrionics but nothing substantial happening, although I hope the arrogance that comes with the job is so obvious that Paul's bill picks up more support. The Fed should be audited and held accountable. The very fact that Ben Bernanke is so aggressive on this thing really bothers me. He should be fighting this battle behind the scenes not in the public.
In the end the market has rallied, Ben Bernanke will be confirmed, and Rodney Dangerfield will be remembered as one of the funniest comedians of them all.
Still, there is uneasiness in the air, and that's to be expected. Everyday something weird happens, it can be little things or it can be mysterious things like Dubai. Investors have been made to sweat, and yet through it all, another strong month goes into the books for the stock market. For all the periodic air pockets and pauses, stocks enjoyed their best month since June. However, toward the end of the month the market was clearly range-bound. After making a series of higher lows, the market hasn't been able to generate the kind of momentum needed to breakout. The drag on the market has been financials, which led the parade until October when all of a sudden a deep freeze hit the sector. Yesterday, banks were up significantly after Abu Dhabi said that it would help Dubai World reorganize $26.0 billion in debt. The banks don't have to be in front of the parade for the broad market to rally but it can't be an anchor. In some ways maybe this Dubai scare could provide a spark for this heretofore slumbering sector.
Dow Jones Industrial Average: November 2009
An article in the WSJ today says to look for a spike in unemployment in the construction space as stimulus money for that niche of the economy is running out. According to the Association of General Contractors of America, the industry only received $27.0 billion of the $787.0 billion stimulus plan. Unemployment among construction workers is 19.1%, up from 10.7% a year ago, as 1.5 million have lost their job since the recession began.
Many advertisers are standing by Tiger Woods, with Nike (NYSE:NKE) among those issuing public statements. The best statement, however, is from Accenture, which is running an ad on the WSJ website that reads: "the road to perfection isn't always paved" and pictures Tiger walking uphill. No word on if his wife was chasing him in the background.
Disclosure: No Positions