I don’t know Jay Cutler personally, but he does appear to be kind of a dick.  Maybe I’m just frustrated with his awful performance from last night, but he does seen like the type of guy you don’t want to hang around.  It’s probably easy for me to say that watching from afar.  But if you feel the same way and you’re a teammate of Cutlers with the hope of winning a Super Bowl, then you’d better figure out the guy and develop a way to co-exist because the Bears aren’t advancing in the NFC without him. 

Think of Ben Bernanke as Cutler.  You must first get to know him.  And even if you find out that you don’t like him (not necessarily him, but really his policy decisions), you’d better respect him. 

I’ve attempted to get to know how Bernanke thinks and the influence he has on financial markets. You can read about some of this in the following posts–Ben’s got Market’s Back, Countdown to Jackson Hole, Financial Bazookas are Coming, Is the market’s rise due to QE or fundamental reasons?.  After reading these posts, it would be fair to say that we weren’t surprised by Bernanke’s comments from yesterday. 

Much has already been said about these comments.  If you haven’t already, click on to my first three links from this mornings “Friday Morning Reads”.  These will provide some good perspective from yesterday’s Fed statement and press conference.  I want to add only the following three points:

  1. As I have been saying and has he once again proved  yesterday, Bernanke will do everything possible to support stock prices.  You think, like many of these pundits on CNBC and in the financial media, that he’s out of bullets?  He’s not.  Again, read some of my posts from before.
  2. Will this idea of instilling confidence by propping up certain asset classes (stocks, houses) work to revive the economy?  I don’t know.  I don’t know if it will even continue to prop up stock prices over the long term.  But, for the foreseeable future, stock prices should rise.  The liquidity provided by the Fed is that powerful.
  3. Just as Bernanke would like stock prices to rise, he will do everything in his power to keep interest rates low.  Yesterday, he stated that the Fed expects to keep interest rates low through mid-2015!  This should help keep bond prices relatively stable.  However, there still is considerable risk that rates will eventually take off.

Nobody is saying that you have to like Bernanke’s policies, but in order to profit, you must respect the fact that he’s giving the green light to the stock market…for now.

Advertisements