Mean Street: Bernanke Talks, Rome Burns

Update from Evan Newmark's blog at the WSJ.com:


"Well, I was wrong and the conventional wisdom was right. There is no end in sight to the Fed’s easy money. There will be no post-Bernanke selloff.

In fact, at Wednesday’s press conference, Bernanke was at pains to keep the markets happy. He dismissed recent inflation as “transitory” even as the FOMC jacked up its own internal inflation forecasts by 50%.

Naturally, the markets rejoiced. And why not? Bernanke gave a greenlight to all of Wall Street’s easy “one-way” trades. Gold hit a new record. The dollar index slumped yet again. And the stock market hit new post-Lehman highs.

“Party on!” said Ben...

He missed a chance to put a little fear into the markets. And make no mistake, Wall Street needs fear. Without it, things get out of control. Remember the internet bubble? Subprime CDOs?

Nowadays, it’s the government bond market that’s pretty much fearless. It doesn’t care about $4 a gallon gas or $1500 an ounce gold. It doesn’t fear inflation. If it did, would the 5-year note yield 2%?"

Read more at:
http://blogs.wsj.com/deals/2011/04/28/mean-street-bernanke-talks-rome-burns/