Ben Bernanke Hasn’t Changed His Tune:
Federal Open Market Committee Chairman, Ben Bernanke made it clear the Fed would be accommodating as long as economic conditions remain sluggish. He also reiterated the Fed would hold assets long after it reduced purchases which would effectively keep the demand curve shifted and help interest rates stay low. Although concerns about the first derivative, the rate of bond buying purchases are significant, the Fed revealed another tool that has equal weight if used appropriately – “keeping assets off the market”.
Stocks seesawed in the trading session as investors interpreted his commentary. Bernanke and company seem to have been effective in reducing over leveraged positions that depend on low interest rates via confusing signals that suggests the great rotation can continue unabated throughout the end of the year.
The short-term rally suggests more follow- through can occur but equities are far from significant moving averages we follow. A pullback would be a buying opportunity as longer run trends have not broken, the dollar continues to look strong against the euro and gold seems out of favor.
Here’s our update on Gold Prices we called on April 17, 2013: See “Is Gold’s Demise Signaling A Long-Term Risk Aversion Shift?”