Author: Bonddad

For the week, the DIA’s (DOW) were up 1%, the SPY’s (S&P 500) were up 1.2% and the QQQQ’s (NASDAQ) was down 1%.  economic news whipsawed the market all week.  The market rallied on Bernanke’s nomination on Monday, sold-off on Tuesday’s consumer confidence number and Thursday’s durable goods report, and rallied on Friday’s GDP report.  The markets are still caught between strong economic crosscurrents.  The bears are looking at higher interest rates, rising energy costs and the Fed’s concern about inflation, while the bulls are looking at the economies overall resilience, especially in the wake of Katrina and Rita.  Neither side has been able to get the upper hand.  As a result, the markets are still mired see saw action that probably won’t break until events nullify one side’s perception.

The latest RWNM line is there is nothing in the indictment about the underlying crime — revealing a covert operatives name in violation of the statute.  What no one on the RWNM is mentioning is the Special Prosecutor has wide discretion to bring whatever charges he wants.  It is obvious Fitzgerald is going after a simpler case because it is far easier to win.

As Steven Roach notes, the financial markets have made a habit of testing new Fed chiefs:

Alan Greenspan faced a stock market crash two months after he took over in August 1987. Paul Volcker had to cope with a rout in the bond market three months after he became chairman in August 1979. G. William Miller was challenged immediately by a dollar crisis in the spring of 1978. For Arthur Burns, it was the inflation bogie in the early 1970s.

Should the Senate confirm Bernanke, there is no shortage of problems facing the new chairman.

Other issues have fallen by the editorial wayside During the Fitzmas season.  This is understandable.  I am no fan of this administration in any policy area.  Domestically, they have done little to meaningfully grow the economy or unite the country.  Internationally they have alienated traditional allies and lowered US credibility in the court of world opinion.  

Yesterday, I highlighted some of the more mainstream comments of Ben Bernanke.  In general, he comes across as a more or less right leaning economist.  This is the same school that taught Alan Greenspan.  Bernanke has made some other interesting policy observations and or arguments.  Several of these have raised concerns from some economi