MV Weather Report: Obama Shines Sun on Bernanke

By Matt Theal  AUG 25, 2009 4:25 PM

Rain or shine, we reivew the day's biggest stock stories.


We can now lay all speculation to rest; there will not be a new Fed chairman. This morning, President Obama nominated Ben Bernanke for another term as the Chairman of the Federal Reserve while on vacation. The President said that the economy is still a long way from being healthy, which is why its important for Mr. Bernanke to finish what he started.

Oddly enough, when Minyan Peter heard the news, he decided to Buzz in from his holiday.

“As I type, I am staring out at 300 year-old trees in the rain forests of Olympic National Park.

“And I had to laugh when I read on Bloomberg that Chairman Bernanke was reappointed after ‘keeping the US out of depression.’

“Maybe its my mood and my surroundings but I never thought ‘a depression’ was an event, but rather an era. And judging by my measures of consumer credit demand, I would offer that depression is out there.

“While the Federal Reserve can provide unlimited liquidity to the system, ultimately it is a bank's borrowers who determine solvency.

“Yes, a liquidity crisis was averted, but the credit crisis continues. And there is little Mr. Bernanke can do about that.

“As the towering spruce trees around me remind me: ‘Don't measure the world by minutes and hours, measure it by years and centuries. It all takes time.’”

Mr. Bernanke has taking a lot of heat for his handling of the financial crisis. See The Federal Reserve: Instigating Crisis Since 1913. Some people feel that it was reckless for him to use taxpayer money to rescue the financial institutions. A main concern of his critics is why did Lehman die and AIG (AIG) get to continue operating? I have no idea but I would say that rescuing the banks: Citigroup (C), Bank of America (BAC), and the rest of the sector had to be done. Looking back, it seems like his moves did pay off as it's becoming clearer every day, the U.S. economy is on the road to recovery.

As for the markets, the bears just can't get them down (though a lot pressed their bets at today's high, which is looking like a good move) as a another new high was made in early morning trading at S&P 1037. The afternoon session was slow as the S&P seesawed all day before closing higher by 0.24% to 1028.

Today on the Buzz and Banter Quint Tatro gave his thoughts on the state of the tape.

"When retail investors turn on the TV tonight they’ll view today’s action with a yawn as the S&P ends flat and the Dow with another nice gain.

"What the won’t see however is the deterioration taking place under the surface and the caution signs being distributed for anyone paying attention. Sure it could amount to nothing but when I see warning signs like JP Morgan (JPM) trading a few pennies off lows on volume, or IBM (IBM) heavy after a failed break, I got short here. Oil giving back a monster break point and retail (XTR) never having made a new high, then I get bearish.

"Hey, understand I haven’t been pounding "the world is ending" drum this whole run. I just play it like I see it. If the market message changes, as will I; but for the time being, I am leaning short using QQQQ, and China FXP."

That’s all for tonight, have a great one!

Position in BAC and C

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