Recently the markets have rallied on the day of the FOMC announcement. The market knows the Federal Reserve Bank is not going to say anything to spoil the apple cart. They have been more than accommodative by keeping the Fed funds rate (overnight rate from the FRB to the large major banks) at virtually zero percent. Some would argue that these efforts have saved the financial system. This comes even as banks are still not lending. Well who is really qualified to get a loan anyway with unemployment at 10 percent? While the U.S. Dollar is near all time lows it is important to remember that this helps to boost U.S. exports. The question is what exports? The U.S. manufacturing sector has shrunk by 80 percent over the past 20 years. It is still surprising that with all the mathematicians, statisticians, Ph D’s, MBA’s, and every other title that no single person is seeing this explosive government spending and money printing as a problem in the U.S.
Today the highly read Time Magazine announced that Federal Reserve Bank Chairman Ben Bernanke is the man of the year. He is being honored as the man that prevented the second “Great Depression.” It’s amazing that the world thinks things are back to normal. Well at least the media who reports the news thinks so. People seem to forget that Ben Bernanke was around when Alan Greenspan lowered rates down to 1 percent in the early 2000’s causing the greatest bubble (credit and housing bubble) in 70 years. Now Ben Bernanke is following the same recipe with low rates. One can only wonder what kind of bubble comes out of this one.
Here is some irony for us all. The President was given the Nobel Peace Prize despite being in two separate wars. Some would find this rather disturbing considering it is a peace award not a killing or death award. Then Time magazine gives their “Man of the Year” award to Ben Bernanke who helped cause the huge financial crisis along with former Federal Reserve Board Chairman Alan Greenspan. Goldman Sachs is also giving out nearly $20 billion dollars in bonuses this year despite being bailed out by the U.S. government one year ago. One can only wonder if Charles Manson is due to receive the Congressional Medal of Honor, or tiger woods receiving the Husband of the year award.
The markets are all positive, trading higher as the dollar is lower. Technology stocks such as Apple Computer (NasdaqGS: AAPL), Google (NasdaqGS: GOOG), and Research in Motion (NasdaqGS: RIMM), are leading the NASDAQ. Other market leaders such as Goldman Sachs (NYSE: GS), and Exxon Mobile (NYSE: XOM) are also trading higher on the day giving the markets a broad based rally ahead of the FOMC announcement.
Nicholas Santiago
Chief Market Strategist
www.InTheMoneyStocks.com
