I’m listening to Bernanke telling everyone that he doesn’t expect stagflation, he expects inflation to moderate and we’ll have growth in GDP soon. He says food and energy represent bulk of inflation. So, he says he expects oil prices to come down, but hasn’t yet said what he’ll do if those prices don’t come down. He just says they are concerned and will be watching it. The thing he says about the banks is a little scary: he would like them to raise more capital, even though he says they are well capitalized, and getting that capital from SWF is fine. Actually, listening to him, I’m surprised the market doesn’t sell off. If you decide to listen on CNBC, just make sure you’ve taken your blood pressure medication.
4 Comments
February 28th, 2008 at 1:05 pm
Lisa: I follow our markets closely. I have wondered, have you/Chuck about
the way these indices are “holding up”, not correcting downward?
With the cascade of negatives, the Dow could easily be under 11,500 as other times in recent decades. Likely, the M3 supply is/has been wide
open for months/to years now to “prop up our markets”.
With this long term “prop”, we will likely take a 30+% market correction,
and that may be a conservative guess. It is VERY disturbing to watch
govt interference in “Free Markets”.
Thank you and Chuck for your thorough, concise updates. There are few critical market blogs for “retail” traders. For me, your efforts mean
information balance.
February 28th, 2008 at 1:12 pm
What we are seeing now, the markets “holding up”, is simply the unwillingness to recognize reality. This has happened during other crises and confounded market watchers then, too. Eventually, reality does take over, as no amount of cheerleading can stop the dominoes from falling.
February 28th, 2008 at 11:21 pm
Lisa,
How can Bernanke expect oil prices to drop with the continued devaluation of the dollar? Any thoughts? And thanks for putting so much of this into perspective for me.
Diana
February 28th, 2008 at 11:42 pm
Bernanke is hoping, Diana. They are throwing everything they have at this problem and the end results are not what they were hoping for. Bernanke pretty much said he didn’t know what they would do if oil doesn’t drop, they will cross that bridge when they come to it.