Ben and Mario's Most Excellent AdventureSeptember 17, 2012 @ 8:32 AM EST
Certainly the actions by Ben Bernanke and the FOMC, combined with the ECB announcement the prior week, have dominated the headlines and largely accounted for the global rally which added about +3.9% to the S&P index since Thursday, September 6th. (For last week, the S&P was +1.9%, the Dow +2.2% and the NASDAQ COMP +1.5 %.)
Let’s call this “Ben and Mario’s Most Excellent Adventure” and we wonder if next we will see some time travel similar to that of “Bill and Ted”. But instead of Napoleon, Genghis Khan, Freud and Lincoln, perhaps Mr.Bernanke and Mr. Draghi could visit with Adam Smith, John Maynard Keynes, and Milton Friedman.
The media, analysts, commentators and assorted pundits were all over the FOMC action, with reactions ranging from the highest fawning praise for the FOMC Committee and Chairman to the “fire Bernanke” gang and everywhere in between. The “in betweens” had a lively debate over whether the FED’s action would truly have an impact on nominal GDP, housing, and the jobs market, with the sidebar argument over rising costs for consumers, and most especially the impact of rising energy costs and a weaker dollar.
So let’s start with number of the notable quotes pertaining to the FED.
Among many explanatory comments, Chairman Bernanke said, “With their home prices rising, people will start to feel more confident about spending again and companies will start increasing activity and hire more people.” (There’s only one or two catches to that, not the least of which is major banks being willing to give the credit-worthy a mortgage.)
“Ben’s New Bender” --New York Post headline Friday, with columnist John Crudele remaining a fierce FED critic, saying “Bernanke is showing why professors should remain in the classroom, playing harmlessly with their theoretical solutions to made-up problems.”
“I’m still skeptical about whether monetary policy alone can come close to doing enough — a skepticism shared by Ben Bernanke…We still need fiscal policy. But it’s good to see the Fed doing more.” -Paul Krugman in his NY Times blog.
“If I had messed up as badly as Bernanke I would for sure resign. The mandate of the Fed to boost asset prices and thereby create wealth is ludicrous — it doesn’t work that way. It’s a temporary boost followed by a crash.” --Marc Faber, publisher of the Gloom, Boom and Doom Report, on CNBC Friday.
“I suspect that the right's unyielding and vitriolic nihilism towards the economy has been an education for Professor Bernanke. From Thursday's actions, we can only infer that it has finally freed Chairman Bernanke to do the right thing.” --opinion piece in The Guardian, praising Bernanke’s courage in the face of political “browbeating and bullying”. The piece added, “The Federal Reserve's new round of quantitative easing shows its chairman's bold commitment to intervening to restore growth.”
“Fed Primes Pump, Americans To Pay Even More At Gas Pump.” --IBD in an editorial, pointing out that gasoline prices have risen for 10 straight weeks in anticipation of further quantitative easing (We can see the bumper sticker now: “HONK IF YOU HATE QE3”).
“Comparing the Federal Reserve to a rehab clinic offering addicted investors a synthetic high has been a favorite of Wall Street wags ever since the first round of Fed stimulus nearly four years ago. The punch line is that you always need more and more to get the same high and each bout of euphoria is followed by a crashing comedown…the coming week is likely to bring a more sober period for markets as investors digest what it means in the longer run and turn their attention to the remainder of the year.” --Reuters
And the always cynical Zero Hedge puts its own dark humor spin on things in a Tweet, “@zerohedge Take all 47 mil food stamp recipients, give them an Etrade account, and a keyboard with only a Buy button. Problem solved.” (Sad, but funny)
But there were just one or two more things out there this week other than the Fed story:
Apple’s formal announcement of the iPhone5 might have received more press and social media coverage than any consumer product launch in history. We covered many of the highlights in another post, but the story keeps on going, with Apple saying according to Macworld, “Pre-orders for iPhone 5 have been incredible. We’ve been completely blown away by the customer response.” (and AAPL reaching yet another all-time high Friday at $696.98..is it even remotely possible it won’t crack that magical $700 number, even if just briefly?)
“On holiday, Princess Kate forgets everything.” --Gawker.com, on the international flap over topless photos surfacing of the “world’s most photographed person”. (Coming on the heels of Prince Harry’s naked Las Vegas romp, is exhibitionism becoming rampant at Buckingham Palace? What’s next, paparazzi shots of Charles and Camilla in leather bondage gear?…oops, scratch that most disrespectful and unappetizing thought!)
“We burned two years not working on mobile. Now we are a mobile company and all the code is being written in mobile.” --Facebook’s Mark Zuckerberg, as reported by Forbes and others regarding his appearance at TechCrunch Disrupt. Zuckerberg added that “The performance of the stock has obviously been disappointing. We care about our shareholders.” Asked if the stock price has caused a morale problem at Facebook, Zuckerberg deadpanned: "It doesn't help." (PC World). (We caught much of the interview with Michael Arrington and just have one question: what is up with Arrington’s constant use of the phrase “Can you ‘unpack’ that answer/I have to ‘unpack’ that answer”? Is “unpacking” some new valley techspeak we are shamefully unaware of?)
The unfortunate and tragic events in the Mideast and especially the deaths in Libya unleashed an unseemly firestorm of press political press coverage and back and forth between Obama and Romney, with neither side distinguishing themselves.
“I think it’s a terrible course for America to stand in apology for our values, that instead when our grounds are being attacked and being breached, that the first response of the United States must be outrage at the breach of the sovereignty of our nation. An apology for America’s values is never the right course.” –Governor Romney’s statement per ABC News
“Governor Romney tends to shoot first and aim later.” –widely reported Obama response
In a related note, Larry Kudlow’s weekend radio show made the point in discussion that “Obama has had a pretty good two weeks politically, although the Clintons have had a better two weeks.” This referring to Bill Clinton’s very well received Convention speech and praise for Hilary Clinton’s performance during this Libya crisis.
“Everyone can now be certain that it (the ESM) does not violate the constitution. Respect for the Constitutional Court will hopefully persuade the plaintiffs in the future that this treaty does not flout the constitution.” --Reuters reporting comments by German Finance Minister Wolfgang Schaeuble after the German Constitutional Court ruling.
Der Spiegel was not so sure, saying, ”The winners and losers