And Tax Cuts Said, "Let There Be Growth." And There Was Growth. And It Was Good. And Ben Saw That It Was Good.
In Ben Bernanke's debut this morning before the House Financial Services Committee (which I percolated over earlier today), he plucked the markets out of their downturn and flung them into positive territory by virtue of his encouraging remarks about the state of the economy.
In an extreme nutshell, his message boiled down to this:
- The economy is in a durable expansion
- I will maintain continuity with my predecessor
- Fed funds rate moves will be data-driven
These were the three points that traders and Fed watchers were by and large expecting to hear, but now finally hearing them - free of surprises or radical policy shifts - seems to have provided the financial Zoloft the hand-wringing market was jonesing for.
Bernanke did caution there was an ongoing inflation risk (not surprising given the good clip at which the economy is running and the consequent high capacity utilization), but that the risk continued to appear contained. This is exactly what Greenspan has been saying (and the way he's been saying it), giving traders further assurance of continuity in the Fed's outlook.
The Dow flirted briefly with a a new multi-year high, but didn't quite punch through.
Bernanke Takes Center Stage
Handcrafted by Flip on February 15, 2006 |
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