MARKET COMMENT
February 13, 2007
The movie was made in 1977 and here’s a photo of “Bee-Gee”
Ben from about the same time.
He was probably
having more fun then--I know I was.
All that aside, bullish investors are waiting for soothing
words from Bernanke as he begins testifying
tomorrow.
Will he scare investors
worried about rising rates?
Or, will he
say all the right things?
Some pundits
think the tough Fed talk this past week was designed to curb enthusiasm for
rate cuts.
That may be right, but it
just seems a data dependent central bank is just biding time.
They want to keep the rhetoric tough to keep
dollar bears and gold bulls on their toes--but that’s about it.
While talking tough, the Fed and Treasury are still keeping
markets well-lubed with injections.
We’re
not Money & Banking experts.
[I’m
personally willing to acknowledge to being asleep in all those classes in
college.
I mean c’mon they’re really
boring!]
So, there are probably many
legitimate reasons to be conducting all these open market operations that aren’t
nefarious or unnecessary.
The gold bugs wouldn’t
agree.
The gold bugs see the elimination of “official” M-3 data as
an attempt to cover-up too much money printing.
And the folks below have reconstructed it to demonstrate why there’s so
much liquidity in the world and why gold prices need to rise to discipline
central banks.
Okay, enough of all that; Bernanke
will speak tomorrow and then we’ll see investors react.
But speaking of a lot of liquidity, the big news story today
was the rumor of a bid to buy AA [Alcoa] one of the leading industrial
companies in America
by foreign companies.
How will this play
in DC I wonder.
Also, MMM announced a major [gasp, $7 billion] stock buyback
program which also helped the DJIA move higher.
Stock buybacks help earnings since there would be fewer shares.
But, others feel this is a deception for PE’s
and why not raise dividends or spend more on research?
That’s the other side of the argument.
In more conventional sectors most markets did “okay” when
viewed from the usual “weekly” charts.
Meanwhile, overseas markets are moving in strange
directions.
First pundits called Latin
American markets overbought and basically too rich.
So Ben will speak and everyone will tense as they parse his
every word.
It’s not up to us to wonder
about all this since it doesn’t affect what we do technically one bit.
It’s good theater I
guess.
Have a pleasant evening.
Disclaimer:
Among
other issues, the ETF Digest maintains positions in: RTM,
SPY, MDY, IWM, QQQQ, GLD, SLV, DBP, ILF INP, BSE INDEX, HANG SENG INDEX, EEM,
EFA, EWA and EWM.