What's with Bernanke jawboning the stock market upwards?

[blazespinnaker]

This is the second time he's talked and the markets have skyrocketed. What a joke of a fed chairman he's turning out to be..

[blazespinnaker]

Re: What's with Bernanke jawboning the stock market upwards?

"The overall increase was in line with expectations although core inflation, which excludes energy and food, rose by 0.3 percent in June, higher than the 0.2 percent Wall Street had been expecting. That increase left core inflation rising for the past three months at an annual rate of 3.6 percent, far above the Federal Reserve comfort zone of 2 percent or less."

I mean, come one, inflation is running red hot, core is at 3.6%

Are people completely blind here?

And heliben is talking about inflation moderating? I gotta do a leveraged short on this market, this is nuts...

[bart]

Re: What's with Bernanke jawboning the stock market upwards?

"The overall increase was in line with expectations although core inflation, which excludes energy and food, rose by 0.3 percent in June, higher than the 0.2 percent Wall Street had been expecting. That increase left core inflation rising for the past three months at an annual rate of 3.6 percent, far above the Federal Reserve comfort zone of 2 percent or less."

I mean, come one, inflation is running red hot, core is at 3.6%

Are people completely blind here?

And heliben is talking about inflation moderating? I gotta do a leveraged short on this market, this is nuts...

I do urge caution on shorting, especially today. The Fed injected almost $17 billion via two temporary open market operations.
It also could mean that the FOMC minutes due at 2:00 EST could contain a negative surprise or two...

[metalman]

Re: What's with Bernanke jawboning the stock market upwards?

I do urge caution on shorting, especially today. The Fed injected almost $17 billion via two temporary open market operations.
It also could mean that the FOMC minutes due at 2:00 EST could contain a negative surprise or two...

NEWS ALERT
from The Wall Street Journal

July 20, 2006

Federal Reserve policy makers meeting last month were all concerned by higher core inflation, but most expected inflation to ease, according to the June 28-29 meeting minutes released today. The FOMC voted unanimously on June 29 to raise the federal funds rate for 17th straight time, to 5.25%. But the minutes show many of the committee's members had "significant uncertainty" about future policy, and one member indicated last month's rate increase was "a close call."

Earlier today at a Senate hearing, Fed Chairman Bernanke reiterated that a moderation in U.S. economic growth "seems to be under way," which should help to limit inflation pressures.

http://wsj.com/article/0,,SB11534183...?mod=djemalert

[blazespinnaker]

Re: What's with Bernanke jawboning the stock market upwards?

Oh, hell, Bernanke, keep it up.

I think I've found a great way to make money, Bernanke Arbitrage!

[metalman]

Re: What's with Bernanke jawboning the stock market upwards?

Oh, hell, Bernanke, keep it up.

I think I've found a great way to make money, Bernanke Arbitrage!

hey, blaze. you're gonna love this one...

WASHINGTON (Reuters) - There is room for American workers' wages to grow and reason to expect it, Federal Reserve Chairman Ben Bernanke Thursday told congressional critics who said pay wasn't keeping pace with profits.

In a second day of testimony on the U.S. central bank's semiannual economic forecast, Bernanke told the U.S. House of Representatives' Financial Services panel he expected inflation to moderate and said a wage rise would not impede that.

"Increases in real wages are entirely consistent with low inflation, there is no contradiction," he said in response to a string of questions from lawmakers who said average Americans feel pinched by rising energy and other costs.

http://ca.news.finance.yahoo.com/200...ages-grow.html

excuse my french but what the **** is he talking about?

http://www.itulip.com/itulip_income_...ion_chart.html

[jk]

Re: What's with Bernanke jawboning the stock market upwards?

hey, blaze. you're gonna love this one...

WASHINGTON (Reuters) - There is room for American workers' wages to grow and reason to expect it, Federal Reserve Chairman Ben Bernanke Thursday told congressional critics who said pay wasn't keeping pace with profits.

In a second day of testimony on the U.S. central bank's semiannual economic forecast, Bernanke told the U.S. House of Representatives' Financial Services panel he expected inflation to moderate and said a wage rise would not impede that.

"Increases in real wages are entirely consistent with low inflation, there is no contradiction," he said in response to a string of questions from lawmakers who said average Americans feel pinched by rising energy and other costs.

http://ca.news.finance.yahoo.com/200...ages-grow.html

excuse my french but what the **** is he talking about?

http://www.itulip.com/itulip_income_...ion_chart.html

wage increases are not inflationary if they are accompanied by sufficient increase in productivity. for some time productivity gains have gone to the employer - this is why profits are so high.

[Finster]

Re: What's with Bernanke jawboning the stock market upwards?

wage increases are not inflationary if they are accompanied by sufficient increase in productivity. for some time productivity gains have gone to the employer - this is why profits are so high.

I vigorously disagree.

Productivity has nothing to do with inflation. The notion that it does is one popularized by Greenspan in order to rationalize his money printing and bubble blowing. If carried through to its logical conclusion, it would be tantamount to the government claiming for itself all the benefits of the advancement of technology.

Productivity makes it so that it takes fewer man-hours of labor to produce something. The result is that the produced item is cheaper in real terms. Turning that on its head to in effect insist that the item should cost the same allows the government to pretend that inflation is X-(the rate of productivity increase) rather than X. So now, for example, that we can produce a transistor in only a zillionth of a man hour, while in 1955 it may have taken hundreds, somehow reduces inflation? Does the fact that a transistor could not produced at any price in 1935 mean that we have had net inflation of negative infinity in the past seventy years?

[blazespinnaker]

Re: What's with Bernanke jawboning the stock market upwards?

I don't care about inflation.

I only care about assets I own not appreciating in value.

I happen to own a lot of cash right now and I'd rather not see it go down in value.

I understand that there are monetarists and theories and whatever, but at the end of the day, isn't that all we care about?

Isn't cash just another asset class? Albeit, a very important one because it underlies all day to day transactions, but the same could be said about real estate because it's an engineer of so much GDP growth.

[Finster]

Re: What's with Bernanke jawboning the stock market upwards?

Isn't cash just another asset class? Albeit, a very important one because it underlies all day to day transactions ...

Yes. And not only that, but it's probably the least understood. This is because it typically is also the unit in which the market values of assets are measures. If you have $1000 in cash and its value changes, then you have, well, $1000 in cash. That peculiarity tends to conceal those changes.

Moverover, it also tends to impart imaginary movements to other assets. If, for example, the real value of an ounce of gold is the same as it was yesterday, but the currency unit in which we quote the gold has fallen, it takes more of the latter to buy the same value of gold. Yet most people interpret that change as a rise in the price of gold regardless, rather than a change in the value of the currency.

[blazespinnaker]

Re: What's with Bernanke jawboning the stock market upwards?

Yes. And not only that, but it's probably the least understood.

This is because it typically is also the unit in which the market values of assets are measures. If you have $1000 in cash and its value changes, then you have, well, $1000 in cash. That peculiarity tends to conceal those changes.

Moverover, it also tends to impart imaginary movements to other assets. If, for example, the real value of an ounce of gold is the same as it was yesterday, but the currency unit in which we quote the gold has fallen, it takes more of the latter to buy the same value of gold. Yet most people interpret that change as a rise in the price of gold regardless, rather than a change in the value of the currency.

You are right. We need an imaginary currency that we can translate everything into!

And then we could have this imaginary global treasury that has an exchange rate for the all the major currencies against that baby.

But please, for the love of god, don't fix it against gold

Fix it against, um, big macs. Or hotel rates, I always think that hotel rates seem like a great indicator of inflation.

[Finster]

Re: What's with Bernanke jawboning the stock market upwards?

You are right. We need an imaginary currency that we can translate everything into!

And then we could have this imaginary global treasury that has an exchange rate for the all the major currencies against that baby.

But please, for the love of god, don't fix it against gold

Fix it against, um, big macs. Or hotel rates, I always think that hotel rates seem like a great indicator of inflation.

Well we could use a real currency, but at a fixed time. At least that's what I do with the FDI. The base unit is Y2KUSD - the value of the USD dollar at the beginning of the year 2000. What you see below is what you get if you plot the current value of the USD against the Y2KUSD (log format).

[jk]

Re: What's with Bernanke jawboning the stock market upwards?

You are right. We need an imaginary currency that we can translate everything into!

And then we could have this imaginary global treasury that has an exchange rate for the all the major currencies against that baby.

But please, for the love of god, don't fix it against gold

Fix it against, um, big macs. Or hotel rates, I always think that hotel rates seem like a great indicator of inflation.

the economist magazine has been posting a big mac index for years. it's a standardized item that allows direct comparison of purchasing power. it's actually not a bad index.

[Jim Nickerson]

Re: What's with Bernanke jawboning the stock market upwards?

Well we could use a real currency, but at a fixed time. At least that's what I do with the FDI. The base unit is Y2KUSD - the value of the USD dollar at the beginning of the year 2000. What you see below is what you get if you plot the current value of the USD against the Y2KUSD (log format).

Finster,

Once you explain this to me, I expect I will regret bringing up the question, but I do not understand how you derived the chart? It seems to me a y2kUSD is still a USD worth 100 cents, unless you measure the dollar against some standard then, and the same standard now. If FDI stands for "foreign direct investment" I am not smart enough to understand how that results in the image your chart displays.

Can you broaden my education? And thank you.

[bart]

Re: What's with Bernanke jawboning the stock market upwards?

Finster,

Once you explain this to me, I expect I will regret bringing up the question, but I do not understand how you derived the chart? It seems to me a y2kUSD is still a USD worth 100 cents, unless you measure the dollar against some standard then, and the same standard now. If FDI stands for "foreign direct investment" I am not smart enough to understand how that results in the image your chart displays.

Can you broaden my education? And thank you.

Pardon me for jumping in, and I'll let Finster explain his creation, but I just had to agree on you regretting the question... ;-)

Seriously though, its quite a clever thing that he has done and it does directly address the area of a standard measure of value. That's all I'll say until he jumps in, other than that FDI stands for Finster Dollar Index.