Today’s FOMC decision revealed nothing new. The Bubble in US Politics remains, and He Who Panders To The Political Bubble (Bernanke) will most likely retain his job as a result of falling in line with Washington’s revisionist consensus.
What will be most interesting from here is what Bernanke does post this immediate term job retention exercise. After he is confirmed by the Senate, he will have to face that stubborn little critter called the data.
There was a time when the US Federal Reserve claimed to be “data dependent.” Just because we have a Bubble in US Politics does not mean that the data ceases to exist. The most recent US inflation reports for the month of December were much higher than Bernanke’s forecasts (CPI and PPI came in at +2.7% and +4.4% year-over-year inflation, respectively).
We think the inflation data continues to rise sequentially until at least August. For He Who Panders To The Political Bubble, our advice in addressing this inflationary data in the coming months would be in line with the picture we have attached below. Hope and pray that everyone in Washington is as willfully blind to the data as you have become.
All the while, remember, hope is not an investment process.
KM
