Random Thoughts: Ben Bernanke Hints at QE 2.5

By Todd Harrison  JUL 13, 2011 10:45 AM

When in doubt, lay it out.


Federal Reserve Chairman Ben Bernanke hit the tape this morning, offering that the Fed is "prepared to respond" if more stimulus is needed.

Buy, Mortimer, Buy!

The very next headline was that Bernanke said "the economy may also warrant less accommodation."

Sell, Randolph, Sell?

Did he just announce QE 2.5?

Was it double talk?

I don't know so I'll say everything and hope something sticks?

I love you but I can't be with you?

It's not you, it's me?

Cats and dogs?

There was one?

I'll tell you, one day we'll (hopefully) tell our grandkids about this juncture in history, much like our grandparents shared stories of their youth -- along with examples of why they remained "thrifty" their entire life -- because they learned a valuable lesson during The Depression, and tried to pass those lessons down the generational food chain.

It's not too late to learn... but it seems like we'll be force-fed that lesson the hard way.

In the meantime, we've got headline risk coming out of every orifice; trade -- or don’t trade -- accordingly as the market chews through this process of price discovery.

As my friend John used to say, the world continues to get curious and curiouser.

Dollah Hollar!

Minyans know the ol' saw by now; a lower dollar is a necessary precursor to -- but no guarantor of -- higher asset class prices. In other words, both the dollar and asset classes can decline, but we're hard pressed to see the two rally together.

With that in mind check the level of the dollar, which is still trending higher (higher lows), and let's use that as a third base coach as we round (the) second (quantitative easing).

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No positions in stocks mentioned.