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Random Thoughts: Ben Bernanke Hints at QE 2.5


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).

Click to enlarge

Random Thoughts:

  • The action in the metals is pricing in one of two things: QE3 or WW3.

  • I don't mean to be dramatic. The above blurb "fit" together so I shared it. Obviously, that's not what any of us want.

  • I respect that gold may be a slush fund for liquidity in a world of fiat currencies, but when the dust settles, I don't foresee commodities as a safe-haven. And no, that doesn't mean it can't rally between here and there.

  • Wait, was that a double negative?

  • The former national security advisor has warned that income disparity could lead to civil unrest.

  • I have a small painting (the size of a business card) in my bathroom that reads, "If you're not happy with your life, you're the only one who can change it. If you are happy, then CHEERS!"

  • Sellers have emerged in the semi-cap equipment stocks (Applied Materials (AMAT), Novellus (NVLS)) and PLD's (XLINX (XLNX), Altera (ALTR)).

  • You want some trippy perspective? Check out the 15-year chart of the S&P; talk about turnabout being fair play, eh?

    Click to enlarge

  • The animal hospital that laid Blueberry to rest sent me a clay imprint of his little paw, with the word "Blue" written in script above it. Is that creepy, or a proper tribute to the memory of a fantastic cat that was taken from us after eight short months?

  • I took a taxi to work today (I usually walk, but I'm told I have a herniated disk) and the driver lamented about how the Internet killed the media industry (I had never met him before). While I agree that the Internet is the most deflationary invention of all-time (this will one day become a mainstream theme), I'm reminded that A) the greatest opportunities are born from the most profound obstacles and B) the leaders coming out of a crisis won't be the same as those who enter it.

  • And, in a "Do Something Joel" moment (a random act of kindness), we swapped information and agreed to play the power-ball tonight, and if either of us won the big pot, we'll give the other person $5M. It's a sucker's bet, I know, but he seemed to be enthused by it.

  • Goldman (GS), American Express (AXP), Barclays (BCS), Bank America (BAC), Deutsche Bank (DB), and Blackstone (BX) continue to trade heavy (and this is important). High beta -- Netflix (NFLX), Google (GOOG), F5 Networks (FFIV), Baidu (BIDU), Apple (AAPL) -- is benefiting, thus far, from that rotation.

  • 26 years ago yesterday. How about that!


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