It was quite volatile in the markets last week with Monday’s sharp selloff leading to a large spike in the volatility index as investors went scrambling for the exits. With Obama on the television proclaiming that an “economic apocalypse” was upon us if the sequester wasn’t repealed – it is not surprising that investors were somewhat worried about the pending deadline.
However, on Tuesday and Wednesday, Bernanke took to Capitol Hill and in a few deft words assuaged all investor fears with these simple words:
“In the current economic environment, the benefits of asset purchases and of policy accommodation more generally, are clear: Monetary policy is providing important support to the recovery while keeping inflation close to the FOMC’s 2 percent objective. Notably, keeping longer-term interest rates low has helped spark recovery in the housing market and led to increased sales and production of automobiles and other durable goods. By raising employment and household wealth–for example, through higher home prices–these developments have in turn supported consumer sentiment and spending.”
In other words, Bernanke simply stated the “QE to Infinity” was here to stay for quite some time. With those words of support investors quickly forgot about the looming sequester disaster and returned their focus back to piling into equity investments. By the end of the week, the sharp selloff was fully reversed as the previous spark of “fear” returned to outright “complacency.”
…..read More. Download This Weeks Issue HERE. which includes:
- What He Said Vs. Reality
- Excessive Confidence
- There Is No Asset Bubble
- QE Not Boosting Growth
- Risk Of Recession Rise
- Great Charts
…..read it all HERE
