EmailNo worries. Bernanke speaks on Friday.
A tropical storm in the Gulf is driving oil prices higher. No worries. Fed Chairman Bernanke is scheduled to speak on Friday and may announce another round of quantitative easing.
Earnings are forecast to decline for the third quarter. No worries. Fed Chairman Bernanke is scheduled to speak on Friday. Europe is in recession and German economic data evidence a worrisome weakening trend. No worries. Bernanke speaks on Friday. China economic growth is slowing dramatically and there are concerns about the loan quality of Chinese banks. No worries. Bernanke speaks on Friday. Significant tax changes that will negatively impact stock prices are likely in any compromise to the looming fiscal cliff issues. No worries. Bernanke speaks on Friday.
Financial market participants' obsession over the prospect for another potential round of quantitative easing has the market blithely ignoring all negative fundamentals. The daily trading action includes Pavlovian responses to any headlines involving mention of the "potential for any further Fed action" from anyone remotely connected to Fed policy. The same applies to headlines out of Europe involving any mention of the European Central Bank buying government bonds.
For now, everything revolves around the belief that the Fed will come to the rescue of the economy and boost the value of financial assets. This may ultimately prove to be true. There is an increasing threat, however, that the market is underestimating the risk that the Fed does nothing, or that any action they take doesn't actually provide the desired impact.
German business confidence dropped for the fourth month in a row. The Chinese stock market dropped 1.8%. Did we mention that Bernanke will be giving a speech on Friday?
Founder and Chairman, Briefing.com
