After my rant yesterday, The Dow throws a 280 point hissy fit!, resulting from my unhappiness about the behavior of the market response to the rumor mill, I was sort of happy today to find investors coming back to their senses ... maybe.

So I followed with I guess the Dow hissy fit was short lived, and now am troubled even though the market has responded positively to what I thought was bargain hunting, but turns out might also be more rumors and speculation about a cut in the interest rate that was fed by the fed, by Bernanke himself ... make up your mind already. Bernanke Wants Help for Homeowners, or so the story goes. It does not say how exactly help will come.

The harshest comment I received to my second post, which is not far from my own thinking, was from Cullen:

• The Fed should keep rates where they are!
  
  Let the greedy speculators and the reckless mortgage lenders and the foolish or careless borrowers take their lumps! The free markets NEED to adjust. Those in the lending business NEED to return to SOUND lending practices. We consumers NEED to learn a lesson from this. Live within your means!

Continue reading Bernanke's Fed: Maybe they will and maybe they won't

Bernanke's Fed: Maybe they will and maybe they won't originally appeared on BloggingStocks on Wed, 29 Aug 2007 21:00:00 EST. Please see our terms for use of feeds.

The CPI numbers released this morning seemed to be exactly what Wall Street was seeking. Although the actual CPI number was up 0.7%, the largest increase since Hurricane Katrina, the core number, which excludes food and energy, came in at 0.1%, less than the forecasted 0.2%. Combined with the recent unemployment numbers which were better than expected, and increasing economic strength shown by the Fed Beige Book yesterday, this is about as good as it gets as this morning's surge in the equity markets demonstrates!

It indicates that the economy is still strong with slow growth despite the housing slowdown and higher gas prices. It also shows that inflation is contained primarily with rising gas prices and is not spreading to other parts of the economy.

This is the scenario that Fed Chairman Ben Bernanke described when the Fed stopped raising interest rates several months ago and gives him all the ammunition he needs to continue on his current path, which is to do "nothing" for the foreseeable future. The Chairman appears to be one smooth operator, more so than the forecasters on Wall Street.

Continue reading The CPI and recent economic numbers: The cure for Wall Street's Split Personality Disorder!

The CPI and recent economic numbers: The cure for Wall Street's Split Personality Disorder! originally appeared on BloggingStocks on Fri, 15 Jun 2007 12:01:00 EST. Please see our terms for use of feeds.

Predicting the Fed's rate decision today is one of the easier forecasts that I will ever make. I predict that the Fed will leave rates unchanged and that the inflation bias will remain the same. That was not very difficult. I am simply repeating what Chairman Ben Bernanke has been telling us for the last several months.

Why, then, do many on Wall Street insist that the Fed change its position to match their forecasts? It does not make sense. The Fed is aware of inflationary pressures and the negative impact of the housing slowdown. However, it does not feel the need to act now or to change its bias.

The numbers support the Fed position. The economy is slowing but right now only enough to slow inflation. As I have mentioned, election-cycle politics support taking no action unless absolutely necessary. In the long term, the Wall Street predictions may be right. However, as John Keynes once said, we are all dead in the long run. People who shorted Internet stocks in 1998 learned this the hard way.

My prediction for today is simply more of the same. Remember to Follow the Fed! It is much easier and less stressful way to make money.

Doug Roberts is the Founder and Chief Investment Strategist for FollowtheFed.com, an independent research firm focusing on investment strategies using the Federal Reserve's impact on the stock prices. He previously held executive positions at Morgan Stanley Group and Sanford C. Bernstein & Co

Today's rate decision warning: predicting the Fed is hazardous to your wealth originally appeared on BloggingStocks on Tue, 12 Dec 2006 11:59:00 EST. Please see our terms for use of feeds.