In his much anticipated speech from the central bank summit in Jackson Hole, Wyo., Bernanke reiterated his position that the Fed’s Open Markets Committee stands at the ready to provide help but is not yet unleashing additional stimulus.
The market opened with great anticipation this morning – will Mr. Bernanke say the words, “QE3 is coming on …?” Well, Mr. Bernanke spoke, but the words were not what the pundits told us the market wanted to hear, the opposite in fact, and yet the market did not tank, at least not half way through the day.
What does this tell us? Clearly, it suggests the larger mass of market consciousness does not listen to the pundits. Here’s another thought … Perhaps the market has already factored in Mr. Bernanke’s reluctance to commit. Perhaps, the larger mass of market consciousness is actually smarter than the pundits think. Perhaps, the market sees the reality beyond the negative hype – the global economy is fractured but not broken, and that is more important than QE3.
India’s economy grew at a higher-than-expected 5.5 percent in the quarter ending in June, against analysts’ forecasts of 5.3 percent, government data showed on Friday.
India, like China, is in a slowdown, but the two countries are still growing at strong rates, as are other Asian countries. So, despite the fact that Mr. Bernanke refuses to commit to another round of quantitative easing in the US, investment opportunity exists around the world.
Think about this … Recent reporting has Japan and China on the economic ropes, which implies Asia as a whole is headed for the canvas, yet …
Within Asia, buying by foreign investors was strongest in Japan, with net buying totaling $1.2 billion, followed by South Korea, with net inflows worth $1 billion and Taiwan with $748 million in the week to August 22.
In Europe, that troubled bastion of debt and uncertainty, the sense of doom and gloom is pervasive, yet …
French luxury leather goods retailer Hermes (Euronext Paris: RMS-FR) and Italian designer shoemaker Ferragamo (Frankfurt Stock Exchange: S9L-FF) both reported double-digit increases in profits and revenues in their latest report to investors as demand for luxury goods remained robust in Asia – and even in Europe.
True, the above speaks to but one class of consumer, the class with the most cash, but I have also read recently that the rich are hoarding cash because of uncertainty. Well, that might be true in the US (think US elections), but according to the above stats, it is not so true in Asia and Europe.
As always, my point is – break through the noise. The information we get is distorted, heavily biased toward the negative. If you just rely on the “sense” of it, you will not know the reality.
Perhaps we can learn something from the market. Although I have accused it of being reactionary and fearful, maybe it is more thoughtful than I think. Certainly, today’s reaction to the Bernanke speech suggests, at a minimum, the market can ignore the pundits and act rationally. Now, let’s keep an eye on it to see if it continues to support my new thinking.
Trade in the day; Invest in your life …
