Logo Background RSS

Advertisement

Bernanke Transparency Guidance Fails Again

  • Written by Syndicated Publisher No Comments Comments
    September 20, 2013

    A big surprise! No tapering of QE by the Fed at yesterday’s FOMC meeting!

    So much for Ben Bernanke’s ‘transparency’ policies, supposedly designed  to keep global markets calm by keeping them clearly informed on what to expect from the Fed.

    The Bernanke Fed prepared markets to expect tapering of its QE stimulus to begin at its FOMC meeting yesterday.

    And then shocked markets by announcing after the meeting that it was not going to do so.

    ‘Fed talk’, Bernanke’s so-called transparency, has been the main driving force for markets since Bernanke’s May 22 testimony before Congress, with markets ignoring economic reports, valuations, and the like, as they weigh every word from the Fed’s statements, minutes of its meetings, Beige Book releases, and speeches and hints from individual Fed governors.

    Designed to keep markets calm by providing transparent guidance so there will be no surprises?

    Shown in the chart:

    1.  Bernanke’s first warning, out of the blue, in his May 22 testimony before Congress of perhaps tapering QE as early as June. A market plunge.

    2.  His panicked rush in at the June low with assurances he didn’t really mean the Fed would dial back right away. A sharp rally to new highs.

    3.  The peak at the end of July when the hints from the Fed began again, this time that tapering might begin at the September meeting. A market plunge.

    4.  At the September low, assurances from the Fed that any tapering would be only a baby step. A big rally.

    5.  And here we are with another surprise reversal, no taper at all?

    Some transparency and guidance.

     

    091913a

     

    In answer to a question in his press conference after the Fed’s announcement, Bernanke said, “I don’t recall saying anything about taking any action at this meeting.”

    Ah, denial. He didn’t actually clearly pre-announce that the Fed would take action. So the Fed didn’t mislead?

    The Wall Street Journal says that 66% of economists it polled thought the Fed had clearly signaled it would begin tapering at this meeting. It quoted Doug Cote, chief investment strategist at IMG U.S. Investment Management as saying, “I am perplexed and baffled. I do this for a living. I should not be confused and confounded.”

    Great job again with the transparency, Ben.

    To read my weekend newspaper column click here: The Stock Market Reaches For New Highs Even As Risks Rise 

    Subscribers to Street Smart Report: In addition to the charts and recommendations in your secure area of this blog, the in-depth Mid-Week Markets Update is in your secure area of Street Smart Report.com from last evening.

    Images: Flickr (licence attribution)

    About The Author – Sy Harding, Street Smart Report

    Sy Harding publishes the financial website Street Smart Report Online and a free daily Internet blog at Sy’s Free Blog. In 1999 he authored Riding The Bear – How To Prosper In the Coming Bear Market. His latest book is Beat the Market the Easy Way! – Proven Seasonal Strategies Double Market’s Performance!

    It includes our research and analysis on the economy and markets, and provides charts and buy and sell signals on the major market indexes, sectors, bonds, gold, individual stocks and etf’s, including short-sales and ‘inverse’ etf’s.

    It provides two model portfolios as guides. One is based on ourSeasonal Timing Strategy, one on our Market-Timing Strategy.

    In depth updates are provided every Wednesday, with interim ‘hotline’ updates every time we make a trade. An 8-page traditional newsletter Street Smart Report is provided on the website every 3 weeks, in pdf format for viewing or printing out.

    There is the Street Smart School of online technical analysis ‘seminars’,commentaries to keep you ‘street smart’ about Wall Street, and much more. 

Advertisement