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First Blush on Bernanke


Nothing has really changed.

Alrightee then, Big Ben is saying that we'll see stronger growth "starting later this year" while pledging "adequate insurance against downside risks." He noted that banks are becoming "more restrictive" in lending, a notion that is all too familiar to Minyans and is, perhaps, the most critical thread of this discussion. He also offered that the Fed will act in a timely manner, which we knew and that must be weighed against how many bullets are left in the rate gun.

The net/net is that nothing has really changed--the FOMC is at the ready but they might be sipping water from a fire hose. The most important elements right now are the structural and psychological metrics, which may or may not be mutually exclusive. The former is a function of the bond insurer bailout and the latter is the perception of Fed Credibility. That belief system, domestically and globally, is being put to the test with each and every denial of recession and credit contagion.

With market breadth 2:1 negative and the funky financials acting as they are, caution is warranted. That doesn't mean press 'em (I took my trade in Bear Stearns (BSC)), it simply means respect 'em. These are trying times to be a trader and discipline must trump conviction regardless of which way you play.

Good luck, Minyans, be the ball.

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