Ben Bernanke, fully loaded with his new job security, still panders!
As incredible and scary as this completely politicized US Federal Reserve has become, we have no choice but to react to its compromised outputs. In our Pre-Game note, we noted that the US Dollar was strengthening alongside 2-year yields. Bernanke’s Game Time decision was to reverse that. Once again, he decided to Burn The Buck.
Highlights of his pandering included:
- No change to rates (or rhetoric)
- Setting expectations for “exceptionally low” rates for an “extended period” of time
- Extending the MBS/Agency program to the end of Q1 2010
Don’t get upset with this. Deal with it.
At $75.86, the US Dollar Index is now making fresh YTD lows. At the same time, the associated REFLATION with a Burning Buck has the US stock market making fresh YTD highs. The Pain Trade in anything priced in US Dollars remains UP.
This is an “exceptionally low” point for the once vaunted American financial system’s credibility.
I am moving my immediate term TRADE (upside) target in the SP500 to 1085.
Keith R. McCullough
Chief Executive Officer