The Fed Chairman hinted at further measures to stimulate employment but is still playing his cards close to his chest as to when and how much:
“It is important to achieve further progress, particularly in the labor market,” Mr. Bernanke said. “Taking due account of the uncertainties and limits of its policy tools, the Federal Reserve will provide additional policy accommodation as needed to promote a stronger economic recovery and sustained improvement in labor market conditions in a context of price stability.”
via Bernanke Speech Makes Detailed Case for Fed Action – NYTimes.com.
Colin Twiggs is a former investment banker with almost 40 years of experience in financial markets. He co-founded Incredible Charts and writes the popular Trading Diary and Patient Investor newsletters.
Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.
Focusing on interest rates and financial market liquidity as primary drivers of the economic cycle, he warned of the 2008/2009 and 2020 bear markets well ahead of actual events.
He founded PVT Capital (AFSL No. 546090) in May 2023, which offers investment strategy and advice to wholesale clients.
In my opinion, Bernanke’s efforts have succeeded in stimulating the US stock markets and the USD value; but have failed to stimulate employment.
The dollar strength has discouraged industry from adding jobs, because the strong dollar makes international sales less competitive, so they need even greater efficiencies (more production with less labor).
Bernanke needs to lower USD value to make US exports more attractive in order for US industry to have the incentive to add people in order to produce more. It is clear that a lower dollar will cause lower capital availability for the markets.
We are about to find out if an abundant supply of cake can remain in the pantry whilst it is being eaten in a gluttonous fashion.
It looks like the Europeans are going to print more euros. I have no doubt that Chairman Ben plans to match them note-for-note.