Today Bernanke ended Romney's campaign.

[denner]

I'm more inclined to believe that the market indicies at four year highs is nowhere near as big a deal as it would have been in 2000. Like alot of others around have said, gas prices are a far bigger issue than what their paltry 401k might be doing in the market. There are just as many people that probably swore off stocks after two collapses in less than a decade and now can't earn a dime of interest income thanks to ZIRP.

Of course, the media pundits will play this up, but people have been tuning alot of that bullshit out for years now. (look at CNBS ratings...absolute garbage).

I seem to remember alot more noise about gas over $4 in 2007-08 and alot less concern about where the S&P was trading. I don't think anything has changed in that regard.

 

[brokerboy]

yesterday you watched a desperate man make a desperate move. the truth is you can't hide maybe in comes next week or 6 months but badness is coming. the europeans and in the same spot the mexicans were in 1980's. it never works out well. we have not one positive thing going on with our economy only that the fed is printing money its purely a desperate move. we are one step away from craziness breaking out in all these countries with new leaders and the people of those countries hate us. i would never say short the fed but i think badness is coming down the road.

 

[gtor514]

Quote from jsp326:

I'm not a conspiracy theorist, but it's interesting that oil hasn't risen nearly as much as stocks have since both bottomed out this summer.

Oil/stocks have been positively correlated for a long time, but especially since about 2004.

All the major indexes are at new highs, while oil is considerably lower than it was in March/April. Any good reasons why? Please don't say it's a lack of "evil" oil speculators.

I wonder if we'll see a sudden surge in oil/gas prices once the election is over...

You're right! It's kind of strange that everything is up for the week except for gasoline (RBOB). Is it seasonal or is someone keeping prices low to buffer QE's effect of gas prices at the pump ahead of the election? I would think that gas would go up the most since it should have so much of other inflation cost built into it, ie transportation costs, oil costs, etc.

 

[Tsing Tao]

$100 oil overnight.

 

[achilles28]

The "wealth effect" doesn't work anymore. Americas household balance sheet was turned upside down. Asset values peaked out in 06-07, which were immediately leveraged against. Rejiggering the market to 07 highs does nothing to reflate the collapsed housing market, which is why all this QE hasn't worked, per se (it only reflates one half of the equation (stocks), not the other half (real estate), while household debt remains near record highs). The economy naturally wants to contract to pay off it's massive debt position, but in letting it adjust, we'd go through something approaching 1929. We're really phucked and have been for a while now. The QE + Maiden Lane^ + deficit is really masking a giant depression which is waiting just underneath the surface. All the jobs figures are really hot air created by the deficit. What was it? The other day, the NYT's reported the majority of jobs lost during the crash were high paying, middle class jobs. And the majority of jobs gained back since? Low paying, retail crap. The deficit is coming down, but Bernacke is winding up QE 3. The net effect is the economy is still at equilibrium, deficient by around 1.6-2.0 Trillion dollars. Chump change in todays world of multi-trillion dollar bailouts, but translates to a real decline of around 18-24% GDP. I see Bernacke and the DOT carrying this economy on life-support. At any moment, they could balance the budget and liquidate the Feds balance sheeet. Immediately, we'd crash and burn like the Hindenburg. Ben is a money printer. An avowed inflationist. It's most likely they'll continue monetization until there's a dollar collapse. America is about 4 years out from Greece. This type of deficit spending has an expiration date. Something will give at around 130-140% debt to GDP and then its game over. Head for the hills. Katey bar the door. Or leave the country time. You decide. Remember, 50% of the labor force lives paycheck to paycheck (75 million). Half of all Americans receive some type of Government handout (150 million). We're very close to massive societal breakdown. Japan is a net creditor nation, due to their traditional mercantile trade policies (thank you, Roubini). Their foreign currency assets outweigh their domestic debt. America is a net debtor nation. Our domestic debt far outweighs our foreign assets + gold. This means there is no anchor to the dollar once we get past the danger zone, like Greece and Italy, now. Scarier still, less than 1% of the population understands this. Even scarier, those that do, most of them do not give a fuck. Call me a pessimist, but unless we get some type of breakthrough technology soon, we are done.

 

[Visaria]

Quote from Ripley:

Stock markets are pricing in a Republican victory this election. Markets are not moving on economic fundamentals, but on the premonition of a change in economic policies.

I laughed out aloud when i read that!!

 

[Visaria]

Quote from Handle123:

Need a President that has some balls, heavy sales tax of any foreign made or parts with product. Reduce corporate taxes to 5%.

Make a foreign made toaster $500, betcha companies start making factories.

Smoot Hawley again? People never learn!

 

[piezoe]

Quote from MKTrader:

When did Greenspan do anything like this within 2 months of an election? 1998 wasn't an election year, BTW.

Again, it's unprecedented considering there's no 2008 crisis scenario, no LTCM, no '87 crash, no 9/11, etc. Granted, I think there are still some major problems under the surface, but QE could wait another few months--if QE is even the answer (and I don't think it is).

All major indices were up over 10% before today. The Fed has never done anything like this in front of an election.

Get a grip MK. Look at the damn chart. We've been in a steady bull market since either the June 1254 low or the 7/24 1317 low, depending on which trend line you want to use.

So what you and all the other blind idiots here are saying is that Ben is assuring an Obama victory in an unethical move just before the election. This is complete utter bull shit!" Obama was headed for victory regardless of the Fed move. Measured in nominal gains since he took office, Obama just may have been better for the market than any U.S. president in History! (This is the way the public and the media see it, so there is little point in trying to highlight the fallacies inherent in this simple-minded thinking.)

In effect what you guys who think this latest move by Ben is outrageous are really saying is that without the latest Fed initiative the market would have reversed course before the election when there is no way in hell to know that nor any reason for a reasonable person to bet in that direction. In fact, every longer term trader and investor who has a clue has been long this market since late July-early August.

If you want to debate the wisdom of Fed easing policy, fine. But this latest move by Ben was not a surprise, he telegraphed it well in advance and he's been a far more forthcoming and open Fed Chairman than Greenspan ever was. And furthermore, the Bernanke Fed has had an absolutely consistent policy since easing was begun as a result of the 2008 crash.

 

[piezoe]

Quote from achilles28:

The "wealth effect" doesn't work anymore. Americas household balance sheet was turned upside down. Asset values peaked out in 06-07, which were immediately leveraged against. Rejiggering the market to 07 highs does nothing to reflate the collapsed housing market, which is why all this QE hasn't worked, per se (it only reflates one half of the equation (stocks), not the other half (real estate), while household debt remains near record highs). The economy naturally wants to contract to pay off it's massive debt position, but in letting it adjust, we'd go through something approaching 1929. We're really phucked and have been for a while now. The QE + Maiden Lane^ + deficit is really masking a giant depression which is waiting just underneath the surface. All the jobs figures are really hot air created by the deficit. What was it? The other day, the NYT's reported the majority of jobs lost during the crash were high paying, middle class jobs. And the majority of jobs gained back since? Low paying, retail crap. The deficit is coming down, but Bernacke is winding up QE 3. The net effect is the economy is still at equilibrium, deficient by around 1.6-2.0 Trillion dollars. Chump change in todays world of multi-trillion dollar bailouts, but translates to a real decline of around 18-24% GDP. I see Bernacke and the DOT carrying this economy on life-support. At any moment, they could balance the budget and liquidate the Feds balance sheeet. Immediately, we'd crash and burn like the Hindenburg. Ben is a money printer. An avowed inflationist. It's most likely they'll continue monetization until there's a dollar collapse. America is about 4 years out from Greece. This type of deficit spending has an expiration date. Something will give at around 130-140% debt to GDP and then its game over. Head for the hills. Katey bar the door. Or leave the country time. You decide. Remember, 50% of the labor force lives paycheck to paycheck (75 million). Half of all Americans receive some type of Government handout (150 million). We're very close to massive societal breakdown. Japan is a net creditor nation, due to their traditional mercantile trade policies (thank you, Roubini). Their foreign currency assets outweigh their domestic debt. America is a net debtor nation. Our domestic debt far outweighs our foreign assets + gold. This means there is no anchor to the dollar once we get past the danger zone, like Greece and Italy, now. Scarier still, less than 1% of the population understands this. Even scarier, those that do, most of them do not give a fuck. Call me a pessimist, but unless we get some type of breakthrough technology soon, we are done.

Nice summary. I think it is likely that your estimate of 130-140% debt to GDP before SHTF is a little too conservative and depends on monetary policy in our trading partners countries. It's likely we can go much further down the same road before SHTF.

To get anything much done, Obama will need a cooperative Congress. Sadly, Both parties in Congress have spent the majority of their time trying to sabotage any initiative by the other party, with the result that what little legislation does pass has serious flaws inserted by the opposition. (I wonder if we could talk Dick Cheney into taking Grover Norquist quail hunting.)

 

[MKTrader]

Quote from piezoe:

Get a grip MK. Look at the damn chart. We've been in a steady bull market since either the June 1254 low or the 7/24 1317 low, depending on which trend line you want to use.

So what you and all the other blind idiots here are saying is that Ben is assuring an Obama victory in an unethical move just before the election. This is complete utter bull shit!" Obama was headed for victory regardless of the Fed move. Measured in nominal gains since he took office, Obama just may have been better for the market than any U.S. president in History! (This is the way the public and the media see it, so there is little point in trying to highlight the fallacies inherent in this simple-minded thinking.)

In effect what you guys who think this latest move by Ben is outrageous are really saying is that without the latest Fed initiative the market would have reversed course before the election when there is no way in hell to know that nor any reason for a reasonable person to bet in that direction. In fact, every longer term trader and investor who has a clue has been long this market since late July-early August.

If you want to debate the wisdom of Fed easing policy, fine. But this latest move by Ben was not a surprise, he telegraphed it well in advance and he's been a far more forthcoming and open Fed Chairman than Greenspan ever was. And furthermore, the Bernanke Fed has had an absolutely consistent policy since easing was begun as a result of the 2008 crash.

What was that little passive/aggressive rant about? OK, let's do a little reading comp. exercise.

You said yesterday's action was "No more blatant than Greenspan's moves before elections."

I countered "When did Greenspan do anything like this within 2 months of an election? 1998 wasn't an election year...All major indices were up over 10% (actually 15%) before today. The Fed has never done anything like this in front of an election."

You had no response. So you replied with four red herring-littered paragraphs.

I never said we weren't in a rally. I never said Bernanke's policy hasn't been consisent. And I think the class warfare-artist-in-chief would've won regardless. What I said was that the Fed has never done anything like this in front of an election. And there's nothing to rationalize this move (2008, LTCM,'87 crash, 9/11). The Fed has always claimed to be apolitical, and has tried to avoid policy changes in front of elections. You said nothing to refute that.