About Me

Retired chief investment officer and former NYSE firm partner with 50 plus years experience in field as analyst / economist, portfolio manager / trader, and CIO who has superb track record with multi $billion equities and fixed income portfolios. Advanced degrees, CFA. Having done much professional writing as a young guy, I now have a cryptic style. 40 years down on and around The Street confirms: CAVEAT EMPTOR IN SPADES !!!

Friday, October 15, 2010

The Bernanke Hint...

Today, in Boston during a parlay on monetary policy in a low inflation era, Fed chair BB
again made it clear that further financial asset purchases by the Fed would be a continuing
policy option to keep the economy out of the clutches of deflation. But he made it clear
that since quantitative easing was indeed high octane stuff, the Fed would need to be
both cautious and careful in using it. Since floating the idea of additional QE this summer,
the Fed has observed a fast decline in the value of the dollar since mid-year, and more
recently a sharp jump in the oil price. The US probably wants a lower dollar to foster
continuing good exports performance, but there is no way the Fed or the Treasury wants a
large, disorderly slide. The speed and depth of the dollar's recent slide tells them care is
needed with QE. So too with the oil price. A big QE could trigger a run-up in oil which
would badly punish consumer discretionary purchasing power and help undercut any
value to QE. The Fed has received stern warning from the markets concerning the risks
of large scale QE going forward.

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