The Fed's stock market anxiety
The Federal Reserve is intent on keeping the stock market rolling higher, no matter the cost.
Federal Reserve Board Chairman Ben Bernanke testifies on Capitol Hill in Washington before the Senate Banking Committee to deliver his twice-a-year monetary report to Congress.The top GOP contenders have promised to get rid of Bernanake as Fed chair if elected.
J. Scott Applewhite/AP
The Fed doesn't like it when the stocks go down. Especially when the leading GOP contender for the White House has already said Bernanke is gone.
And so it should come as no surprise that after a 200 point sell-off in the Dow yesterday, they're already feeding their unofficial PR spokesman, Jon Hilsenrath of the WSJ, the latest new weapons specs:
Federal Reserve officials are considering a new type of bond-buying program designed to subdue worries about future inflation if they decide to take new steps to boost the economy in the months ahead.
Under the new approach, the Fed would print new money to buy long-term mortgage or Treasury bonds but effectively tie up that money by borrowing it back for short periods at low rates. The aim of such an approach would be to relieve anxieties that money printing could fuel inflation later, a fear widely expressed by critics of the Fed's previous efforts to aid the recovery.
The dollar was immediately smashed on that news - and here's how the commodity markets reacted...
From MarketWatch:
Crude-oil and gold futures traded higher Wednesday, leaving behind their anemic floor-trading opening as investors cheered a Wall Street Journal report that Federal Reserve officials are considering a new type of bond-buying program. Gold for April delivery rose $15, or 0.9%, to $1,686.90 an ounce on the Comex division of the New York Mercantile Exchange. Crude for the same month's delivery rose $1.10, or 1.1%, to $105.80 a barrel on Nymex.
The Fed is not playing games, guys, they want this market rolling higher. Fight it at your own peril.