When Bernanke speaks he reminds me

Discussion in 'Wall St. News' started by Optionpro007, Jun 5, 2006.

  1. Pabst

    Pabst

    Further hikes should have a steepening effect. The long end of the curve is always impressed with hawkish talk on fighting inflation. The short end is obviously more tied to the Fed's overnight borrowing rate.
     
    #31     Jun 6, 2006
  2. its better to stop raising in the near term and say "we're done"....then give it a while for things to take hold...and then raise again if necessary...there is no such thing as "we're done"
     
    #32     Jun 6, 2006
  3. Pabst

    Pabst

    Some horrible fallacies contained in that article. For one, an investor gets paid on the profit of the share price not by earnings. Many severe declines have come during phases of earnings growth. During periods of inflation the following occurs: rates go higher, those high rates cause investors to "lock in" competitive ROI. Because of high fixed rates investors buy less stock or in some cases decrease stock holdings in favor of bonds. As share prices then fall P/E's decrease. For example if ABC is earning a buck a share and it's PE is 20 then the stock is trading at $20. If there's inflation, perhaps ABC's earnings go to $1.20. But now because I can buy bonds at a high yield I may say I'm only willing to pay 15x earnings for ABC which on $1.20 would be $18 a share. So the stocks earnings increased but the stock is off 10% in share value. The market went NO WHERE for the 16 years between 1966 and 1982. All during the highest period of inflation we've had. In fact that period is virtually the only multi year period the market has failed to rally. Ultimately, down the road, shares may become cheap because book values increase after inflation alters asset prices. However if anyone thinks this sell off the past month is the shallowest concession they're going to see they're on drugs.
     
    #33     Jun 6, 2006
  4. Thought it was obvious that I meant "we're done FOR NOW".

    That being said, I think one more and "DONE FOR NOW" would be better for the market than pausing on June 29th and raising again at the next meeting.
     
    #34     Jun 6, 2006
  5. Good observation. The behaviour of the 30-yr treasure bond was strange. It didn't do much, just shrugged it off and continued higher. Seems like long term interest rates is not rising anymore.

    Could be a good thing (?).

     
    #35     Jun 7, 2006
  6. Greenspan spoke like a senile old man today. That fool should have been canned years ago.

    John
     
    #36     Jun 7, 2006
  7. he needs to realize telling "white lies" is better than spewing everything that comes to mind.

    He should learn a little Greenspeak.
     
    #37     Jun 7, 2006
  8. I am sorry, I didn't mean to capture your quote. I was just addressing my comments in general.

    John
     
    #38     Jun 7, 2006

  9. Are we traders or investors? How lame were all the interest rate decisions for the past three years??? If Bernanke brings uncertainty to the markets, then all the better.
     
    #39     Jun 7, 2006
  10. I hope he tells us everything from what he had for breakfast in the morning, to what he dreamt about at night.
     
    #40     Jun 7, 2006