Is Ben Bernanke a 'rock star' or 'one-hit wonder?'


Today, the much-derided Fed Chairman Ben Bernanke is a "rock star." Next week, will he become the Fed's answer to one-hit wonder Tommy Tutone of "867-5309 Jenny" fame?

That's tough to know, but Bernake proved that yesterday's idiot is today's genius. The Dow Jones industrial average reversed its recent declines soaring at last check 106.89 points to 12,952.67 after the Federal Reserve slashed in the discount rate -- the interest rate on direct loans -- by 0.5 percentage point to 5.75%.

Will this mean much to the problems affecting the economy?

The real estate market is still lousy. Consumer confidence seems shaky. Retail sales still are weak and investors outside of Wall Street remain very, very nervous but less so today than they have been. Again, that's tough to know.

Market pundits of course were joyful. "It's just a brilliant move in letting the markets know where liquidity can be found and at what cost," Tim Hartzell of Kanaly Trust Co. told Bloomberg News. Is this excitement premature? Again, tough to know.

CNBC's on-air talent including my former Bloomberg colleague Dylan Ratigan is in their glory as talking heads snipe at each other about whether the end of the world is coming. They didn't need to fake breathless enthusiasm. Will they be depressed again soon? I wish I knew.

Even Countrywide Financial Corp. (NYSE: CFC), which drew down a huge credit line to stay afloat, surged on the news as did other financial stocks including, Washington Mutual Inc. (NYSE: WM), JPMorgan Chase & Co. (NYSE: JPM) and Morgan Stanley (NYSE: MS). Bear Stearns Cos. (NYSE: BSC) was the exception as an expected bailout has yet to materialize.

Tech stocks including Dell Inc. (NYSE: DELL), which announced an earnings restatement yesterday, Apple Inc. (NASDAQ: AAPL) and Microsoft Corp. (NASDAQ: MSFT) rose as did Hewlett-Packard Corp. (NASDAQ: HPQ) barely budged despite reporting a better-than-expected quarter.

Blue chip stawlarts such as General Electric Co. (NYSE: GE), Deere & Co. (NYSE: DE) and United States Steel Corp. (NYSE: X) also rallied.

The question is whether this is the light at the end of the tunnel or a sign that a train is coming the other way.

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Last updated: February 13, 2012: 04:39 AM

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