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Why Won't the Pundits Take Bernanke at His Word?

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May 22, 2013 – Comments (21) | RELATED TICKERS: T , RUTH

Ever since 2009 pundits have gotten Uncle Ben wrong.  Not because of what Bernanke says but by what the pundits think he really means.  He said he was going to keep interest rates low for an EXTENDED period of time.  I kept arguing here that meant many years because it would take as much to run through the housing foreclosures.

But the pundits kept arguing on a daily basis that it meant 4 months, no 6 months no maybe a year.  Finally Bernanke had to come out and give an earliest date of end 2014.  Pundits moved on to Greece.

Now all I hear is tapering and how Bernanke will start to slow things down despite the fact he has given his parameters.  He said he will continue to buy until unemployment comes down to a sustainable  6 1/2pct rate.

We aren't going to see 6 1/2 pct unemployment any time soon except through maybe attrition, which is not a healthy way.  So I submit we will have a couple years of QE.

And if the economy for some reason takes off well we won't need QE.

I submit today's action was nothing but good old fashion profit taking.  But the pundits have this need to always give reasons for things.

21 Comments – Post Your Own

#1) On May 22, 2013 at 8:07 PM, L0RDZ (82.21) wrote:

Remember  when  they  were saying   the  FED  has ~ had  no bullets  left  or  dry powder  when  they  lowered  rates  from 5%  down  to 4  down  to 3 down to 2 down to  one  and  than down  to  near  absolute zero.

Than  QE  came  and  QE 2   QE 3  and  so  on  and  on  kind of  like  the  fast and  furious  franchise or  say  Rocky  ~~  and  despite  it   working  to  further  keep  rates  near  zero.

Everyone  wants to  come up with  crazy reasons  as to why the market  suddenly  turned today  from  a  green day to  red.

Today was  nothing  other  than that  day  they try  to  scare  everyone  into  thinking  that  you  have  to  get  out now... 

There really was  no news  other  than  the  IRS  head lady  squawking  like  some  hen  giving a  bs  statement  that  she  is  not  guilty  but  will  refuse  to  testify   so  as  to not  incriminate  herself ?  wtf >>>   is  she or  is she  not  a  gov employee  who  either  needs to  be relieved  of  her  employment  or  needs to  explain  as  Ricky  on  the  I  love  Lucy show  would  tell  Lucy  that she  has  some explaining to do.

Also  we  have  a  holiday coming  up  and  usually  we have  a  big  down  day  in  the  days  before  many holidays.

I'll concur  that today  was  nothing  more than  a  good day to  take  some  profits.

The  reason  was  there really is no reason...   SH&^   just happens.

 

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#2) On May 22, 2013 at 8:42 PM, awallejr (85.46) wrote:

Yeah but she blew it by reading a statement first.  That will be considered a waiver.  But I kept hearing people on Bloomberg (I listen to it while I drive a lot) saying it was because of the Fed minutes which discussed tapering tho the consensus on the Fed was exactly what Bernanke was saying before Congress.

Everyone has been asking for a correction and then should the market dip everyone panics.

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#3) On May 22, 2013 at 9:59 PM, jiltin (28.11) wrote:

I read WSJ today morning and now also same message "The Fed could take a first step toward reducing the program at one of its "next few meetings," Mr. Bernanke said, but he cautioned that he was reluctant to move prematurely or aggressively."

If this is true, market is right.  When Bernanke  says this to Capitol Hill, it has full weight.

He will remove or reduce QE soon, but keep the interest rate until 2014. He can pull everything all at once. It needs to be step by step so that growth is not stopped.

Whether any one is panic or not, I am panic and pulled out of stocks to realize my 20% gain. I just want to make sure that I physically gain rather than bookvalue gain.

I will come to know whether I am right or wrong in next few days. If it is wrong, yeah, it is fine with 20% or 22% ROI.

 

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#4) On May 22, 2013 at 11:35 PM, zzlangerhans (99.78) wrote:

When the pundits meet Bernanke, does that make punanke?

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#5) On May 23, 2013 at 12:15 AM, jiltin (28.11) wrote:

Sorry my typo read like this  "Bernanke  can not pull/withdraw everything all at once"

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#6) On May 23, 2013 at 1:52 AM, awallejr (85.46) wrote:

Punanke or Bernanke, I still think the pundits just like to make things up in order to cover 24/7 service.  Personally I think it hurts people in the long wrong due to misinformation.

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#7) On May 23, 2013 at 1:55 AM, awallejr (85.46) wrote:

wrong=run.  Sorry the scotch kicked in.

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#8) On May 23, 2013 at 2:17 AM, jiltin (28.11) wrote:

This is just for sharing knowledge. Bloomberg reports 

"The Fed has said it will maintain bond purchases until a labor market beset by 7.5 percent unemployment has improved substantially.

That’s a departure from previous quantitative-easing programs, which had specified end-dates and amounts. "

 Reaching 7.5% is not far away, just 2 months or 3 months 

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#9) On May 23, 2013 at 11:08 AM, awallejr (85.46) wrote:

That says BESET by 7.5%.  The target has always been 6.5% and has not been changed.  This is the correction we have all been waiting for but the media needs to make up reasons.

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#10) On May 23, 2013 at 12:12 PM, jiltin (28.11) wrote:

Yes, 6.5% target is not changed for interest rate. But, QE tapering reduces money flow and will come soon. Hence, I feel 15,542 Dow and 1687 S&P is max this season as long term outlook.

see our thread discussion here

http://caps.fool.com/Blogs/15542-dow-and-1687-sampp-/829721

 

 

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#11) On May 23, 2013 at 5:14 PM, awallejr (85.46) wrote:

Tapering will only come if things are improving.  And if things are improving that will be a good thing for the market. 

The QE is not going into the stock market.  It is going into TBs to keep US debt costs low and into mortgages, to keep mortgage rates low.  It is the interest rate that is the key. The low interest rate tends to force people to search for yield.  But this has been the case since late 2008.  Why people are finally realizing this now is beyond me.

One of the greatest rallies in history and most people were frightened away by the bears and much of the media.

In the end it will always be about the earnings for the Stock Market.  Track that and it is easier to figure out the market's direction.

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#12) On May 23, 2013 at 6:38 PM, jiltin (28.11) wrote:

Perfectly right.

Why people are finally realizing this now. They knew aleady. 

People were taking advantage of QE, and making the stock market up and up without and real value. This has resulted bullish. It stops here as they undue bullish walks away with money. Otherwise, why would a loss making company (RSOL) jump 129% in a single day!

Now, real value measures in stock market.

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#13) On May 23, 2013 at 7:02 PM, MoneyWorksforMe (< 20) wrote:

 awallejr

Here's a question for you: just who are paying the pundits?

Maybe that will answer your question.

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#14) On May 23, 2013 at 7:08 PM, MoneyWorksforMe (< 20) wrote:

"In the end it will always be about the earnings for the Stock Market. Track that and it is easier to figure out the market's direction."

Another "Ahah! moment" for you awallejr: Didn't you mean EPS? Earnings vs. EPS, There's a big difference.  EPS up revenues down? Hmmm....

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#15) On May 23, 2013 at 7:55 PM, awallejr (85.46) wrote:

jiltin  momentum.  Dangerous stocks to play around with.  They drop just as quickly as they rise.

MoneyWorksforMe 

A lot of sources pay them.  I was watching Fast Money and they do a bull/bear showoff.  The topic was Citibank.  The guy making the bull case actually admitted to buying C today and was getting seemingly genuinely angry at the guy making the bear case.  And I avoided saying EPS since they can be manipulated.

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#16) On May 24, 2013 at 8:41 AM, MoneyWorksforMe (< 20) wrote:

 

 awallejr

Well if you meant to say "earnings" than you must be able to explain why earnings adjusted for corporate buybacks have been stagnant since the middle of 2011.

So you're either lying to prove an idealistic point, or like the vast majoirty of people, you are misinformed about the overall health of the economy. I strongly believe, in this case, it's the latter.

http://www.zerohedge.com/news/2013-05-20/wtf-chart-day-its-all-about-earnings

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#17) On May 24, 2013 at 8:57 AM, MoneyWorksforMe (< 20) wrote:

"A lot of sources pay them."

Okay, so that should explain A LOT, particularly when the fed gets a little concerned equities are getting frothy.  

The TBTF banks are an extension of the fed. The fed wants to tame stimulus expectations, but it cannot realistically remove stimulus. So how does it do it? Send out the hounds. The "analysts" working for the TBTF banks in collusion with the MSM send out articles, telegraphing an early exit that will, in reality, never happen.  In the end it doesn't do a whole lot in most cases, it just helps to slow the rally by temporarily capping some bullish sentiment via its affect on investor psychology. 

Does that answer your question? 

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#18) On May 24, 2013 at 4:16 PM, awallejr (85.46) wrote:

First my original question was rhetorical.  Second I am not interested in your opinion regarding my veracity.  Third, It is hard for me to take the author in your link seriously when he doesn't even know how to spell a simple word like more.  I can accept typos, I do them myself, but spelling more as "moar" 3 times are not typos.

Finally even using your links' chart, with eps adjusted back for stock buybacks it is pacing basically a 15.5 PE.  Not exactly "frothy." Why don't you just look at the 2009 earnings and the 3/28/13 earnings.  Think that the way more than doubling had something to do with why the market is where it is?

A nice link with interesting charts (sorry about the length of the link but I don't know how to shorten them like Porte can):

http://www.google.com/url?sa=t&rct=j&q=how%20to%20calculate%20s%26p%20500%20index%20pe%20ratio&source=web&cd=1&cad=rja&ved=0CDkQFjAA&url=http%3A%2F%2Fwww.marketoracle.co.uk%2FArticle38514.html&ei=wsefUYrKIoa-8ATY14HQBQ&usg=AFQjCNFHCRYTDwgEwd8_u0r0fN6E61PUDw

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#19) On May 24, 2013 at 4:23 PM, awallejr (85.46) wrote:

And oops meant 16.5 not 15.5.

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#20) On May 25, 2013 at 1:16 PM, jiltin (28.11) wrote:

awallejr, As you know I am still learning. I understand the Dangerous stocks to play especially day jump 129% without any valid results.

This is the main reason I have not entered stocks side for so many years.

This year, my main idea is to learn stocks. I changed my strategy little bit. It is working out for three months, but still not mastered the art. 

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#21) On May 25, 2013 at 11:33 PM, awallejr (85.46) wrote:

Well Jiltin take advice from getrich's thread.  The stock market is not for everyone. Many hate the daily fluctuations.  You need to think "month" to "month."  Stop listening to the 24/7 news stations.  As I have said before, create an income stream core (mlps, bdcs, reits).  Then speculate, but keep growing that income stream.  That will always support your holdings over time.

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