If you didn’t know why everything “reflation” has been getting crushed for the last 3 weeks, now you know…
In a refreshingly objective prepared statement today, Ben Bernanke said the Federal Reserve will raise the discount rate “before long”…
Make no mistake folks – this is an explicit change in the Fed’s language. I have been saying for some time now that the current language of “exceptional and extended” was both unsustainable and unreasonable. Apparently the Greenspan Group-thinkers are starting to see the light.
My immediate term downside target in the SP500 is now 1044. I am not in the camp that a Fed hike (or implied hike due to the change in the language) is going to crush stocks to smithereens. I simply think they are going lower, for now.
Goldman Sachs has set unreasonable expectation that the Fed is going to maintain a zero percent rate policy in perpetuity (until 2012).
As Shakespeare said, “expectations are the root of all heartache.”
Keith R. McCullough
Chief Executive Officer