Ben Bernanke Just Crippled U.S. Retirees
The market began lower but by midday it erased that loss and blasted higher. The sizable gains in the market were a direct result of the FOMC meeting where once again the objective was to destroy the U.S. dollar. The Fed, which is basically Ben Bernanke, decided to keep interest rates near zero again.
While the zero-interest rate policy, or ZIRP, was no surprise the expected length of the program was updated. And the update revealed that the Fed expects to keep interest rates near zero until 2014. Yields on bonds have been pathetic for four years and the Fed wants yields to stay low for another two years (at least).
Ben Bernanke has once again managed to penalize responsible savers. The Fed's plan is to keep bond yields low, destroy the dollar and inflate our way out of debt. The strategy of Ben Bernanke may raise stock and commodity prices, but it devastates the savings of retirees and cripples their ability to supplement social security.
After Ben Bernanke announced he would likely target zero-interest rates until 2014 bond yields collapsed.
At the same time, high risk assets climbed and the dollar plummeted. The giant decline in the dollar, which Ben Bernanke treats like toilet paper, spurred an impressive rally in everything commodity related: silver, natural gas (which I believe bottomed Monday) and gold, to name a few.
Oil prices jammed higher too as traders were willing to be more optimistic about their targeted economic growth going forward since zero-interest rates will be present for at least two more years. And if tomorrow's GDP results are anything like this morning's durable goods data, economic growth should exceed most estimates.
Before fourth quarter GDP is announced tomorrow, investors were given December durable goods orders this morning. Durable goods had been expected to expand 2% in December, which was down slightly from the 4.3% (revised) jump in November.
The actual data released today showed durable goods jumped 3% in December driven by aircraft, machinery and a higher demand for metals.
Earnings and economic data have been positive over the past few sessions, but as I have mentioned since the start of this week, I believe the market is prone to a short, but swift, decline. At minimum, it needs to consolidate sideways.
To the upside, 1332 is the SPX number to watch. The bulls nearly hit 1332 yesterday, and they may try again today. But resistance zones are less than one percent away across all major U.S. indices; so if the pullback is going to come it will likely start in the near future.
