The State of the Markets
Thursday, October 31, 2013
It looks like Mr. Bernanke may want to go out in style. Just about the time investors around the globe had concluded that there was simply no way the Fed could begin tapering the size of its QE programs before March or April of next year, it looks like Wednesday’s FOMC statement put the taper back on the table.
The thinking had been simple. Given the state of state of dysfunction seen in Washington D.C., most economists had come to the conclusion that the Fed would need to keep its foot on the gas pedal to make darned sure the economy kept moving forward.
The Man Who Saved the World
Ben Bernanke will likely be remembered as the man most responsible from keeping the global banking system from collapsing during the credit crisis in 2008 and early 2009. Without Bernanke thinking outside the box – way outside the central banker box – the world’s banks would have likely wound up in, well, a world of hurt.
It was Bernanke and friends that engineered the mergers on Wall Street. No, it wasn’t fair. But without the swift action, the big banks on Wall Street would have all gone the way of Lehman Brothers in a hurry.
It was also Mr. Bernanke that managed to come up with creative ways to first push interest rates to all-time lows and then keep them there – for a VERY long time.
The idea was two-fold. First, the Bernanke Fed wanted to keep the U.S. out of a deflationary spiral. Every economist worth their salt knows what has happened to Japan since 1989, and Gentle Ben appeared to be hell bent on not letting the U.S. go down that path.
David Moenning is the founder and chief investment strategist for StateoftheMarkets.com, a website dedicated to investor education and portfolio analysis. Mr. Moenning is also President of Heritage Capital Management, a privately owned, investment management firm. Founded in 1989, Heritage is focuses on risk management and an “own the best and ignore the rest” equity selection strategy.
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Positions in stocks mentioned: none
The opinions and forecasts expressed are those of David Moenning, President of Heritage Capital Management (HCM) and may not actually come to pass. Mr. Moenning’s opinions and viewpoints regarding the future of the markets should not be construed as recommendations of any specific security or Heritage Capital program. No part of this material is intended as an investment recommendation. Neither the information nor any opinion expressed constitutes a solicitation to purchase or sell securities or any of HCM’s programs. Do NOT ever purchase any security without doing sufficient research. There is no guarantee that investment objectives outlined will actually come to pass. Investors should consult an Investment Professional before investing in any investment program. Neither Mr. Moenning or Heritage Capital Management nor any of their employees shall have any liability for any loss sustained by anyone who has relied on the information contained herein. Mr. Moenning and employees of HCM may at times have positions in the securities referred to and may make purchases or sales of these securities while this publication is in circulation. The analysis contained is based on both technical and fundamental research. Although the information contained is derived from sources which are believed to be reliable, they cannot be guaranteed.