Posts Tagged Ben Bernanke
Monthly Strategy – July 2010
Posted by Belisarius in Monthly Strategy on July 3, 2010
Almost unchanged from June.
Equities
Only extremely favorable economic data could change the negative trend established. This is highly unlikely. So I would say we will soon see S&P 500 at 875.
On a macro level, the stimulus is wearing off, politicians and central bankers are not ready to continue with loose fiscal an monetary policies, just the opposite, austerity is the game. For now.
Private demand is weak. Private investments also show no strength. Real-estate is burdened with unsustainable debt levels, still to high prices and weak demand. Without real-estate investment recovery, we cannot talk on sustainable and historically high economic growth rates.
Monthly Strategy – June 2010
Posted by Belisarius in Monthly Strategy on June 9, 2010
Little late…but better late then never…
Equities
Only extremely favorable economic data could change the negative trend established. This is highly unlikely. So I would say we will soon see S&P 500 at 900.
On a macro level, the stimulus is wearing off, politicians and central bankers are not ready to continue with loose fiscal an monetary policies, just the opposite, austerity is the game. For now.
Private demand is weak. Private investments also show no strength. Real-estate is burdened with unsustainable debt levels, still to high prices and weak demand. Without real-estate investment recovery, we cannot talk on sustainable and historically high economic growth rates.
Monthly Strategy – May 2010
Posted by Belisarius in Monthly Strategy on May 5, 2010
Equities
With my 1,200 S&P 500 target reached I’ve moved to a kind of a ambiguous stance to the markets. Now I believe the equity markets are bound for a 10%+ down move at least.
My mid-term view remains unchanged – this is just a bear market rally; U.S. and E.U. economies will experience same patterns in both economy and markets as Japan in ‘90ies.
Recent pickup in consumer spending was due to decreased savings rate, not income growth, so I believe it is unsustainable mid term. The inventory cycle has ran its course, government stimulus is wearing off. A slower GDP growth is almost certain for the second half of the year.
Monthly Strategy – April 2010
Posted by Belisarius in Monthly Strategy on April 1, 2010
Equities
Although I’m convinced that the economy is not pulling a V-shaped almost everywhere except in China and in their commodity based economy satellites I believe that in the short term the equity gains will continue. I have a 1200 S&P 500 target.
I have only a small exposure to the markets (via a June SPY 105/106 put ratio backspread) to keep interest for the markets. It’s performing bad.
My mid-term view remains unchanged – this is just a bear market rally; U.S. and E.U. economies will experience same patterns in both economy and markets as Japan in ‘90ies.
Bernanke Bluff
Posted by Belisarius in Markets on March 26, 2010
All the fuss yesterday was because of this:
When these tools are used to drain reserves from the banking system, they do so by replacing bank reserves with other liabilities; the asset side and the overall size of the Federal Reserve’s balance sheet remain unchanged. If necessary, as a means of applying monetary restraint, the Federal Reserve also has the option of redeeming or selling securities. The redemption or sale of securities would have the effect of reducing the size of the Federal Reserve’s balance sheet as well as further reducing the quantity of reserves in the banking system. Restoring the size and composition of the balance sheet to a more normal configuration is a longer-term objective of our policies. In any case, the sequencing of steps and the combination of tools that the Federal Reserve uses as it exits from its currently very accommodative policy stance will depend on economic and financial developments and on our best judgments about how to meet the Federal Reserve’s dual mandate of maximum employment and price stability.
Mr. Bernanke Speech Before The House Committee on Financial Services
Posted by Belisarius in Markets on February 24, 2010
The important part:
The FOMC continues to anticipate that economic conditions–including low rates of resource utilization, subdued inflation trends, and stable inflation expectations–are likely to warrant exceptionally low levels of the federal funds rate for an extended period.
Premature Exit
Posted by Belisarius in Markets on February 19, 2010
I was on the road yesterday, so the usual service suffered…
The most important piece of news yesterday was FED’s decision to increase the discount rate by 0.25%, to 0.75%. The measure has a marginal real impact on the banking sector, but it could have large psychological impact.
The political and media orchestrated “recovery” pressures both the U.S. government and the FED to remove both fiscal and monetary stimulus. It is highly possible that Mr. Bernanke is heading toward an premature exit strategy, similar like in the 1937/1938 experience, which will lead to crisis relapse. It’s highly probable that the economy could not handle the withdrawal and would return to a recession (from which it has, to be frank, exited for a brief period of time only on a statistical basis).
Ben Bernanke vs. Marvin King
Posted by Belisarius in Markets on February 10, 2010
Marvin King:
It was at this press conference one year ago that I explained the asset purchase programme to you. That was at a time of sharply falling output and collapsing confidence. Since then, the position has improved considerably. Output has stabilised and confidence has recovered. The additional money created by the asset programme will continue to boost the economy for some time to come. But the nature of the headwinds means that the recovery is likely to be slow. And there is much uncertainty – about both the outlook for the world economy and the strength of domestic spending. Although the MPC last week announced a pause in its programme of asset purchases, it is far too soon to conclude that no more purchases will be needed. So the Committee will keep its options open, and further purchases will be made if they prove necessary to keep inflation on track to meet the target in the medium term.
Monthly Strategy – February 2010
Posted by Belisarius in Monthly Strategy on February 1, 2010
Equities
We have seen a meaningful correction in equities in recent couple of weeks, we have a market that fails to react to presumably good news, we have low levels of cash in equity mutual funds and still high number of bulls; high beta stocks suffered massively; For me this is a setup for reversal, I expect further short term losses.
My mid-term view remains unchanged – this is just a bear market rally; U.S. and E.U. economies will experience same patterns in both economy and markets as Japan in ‘90ies.
Questions, Questions…
Posted by Belisarius in Markets on January 26, 2010
I’m puzzled by the market action in recent days. It fells that something is wrong, but I major move down doesn’t seem probable. The news and blogosphere are full of stories on Mr. Bernanke and AIG/Goldman Sachs/Societe Generale unwinding. Both are neither interesting neither useful in investing. Who cares what happened more than year ago, it doesen’t affect the future in quantitative manner. FED Chairman? Even if Mr. Bernanke is replaced by someone else it would be extremely to change the path started by Helicopter Ben (maybe impossible). Only entertainment for the media here.