Is Bernanke Breaking Bad?

 | Feb 29, 2012 | 11:15 AM EST
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Somehow, Ben Bernanke's comments have been interpreted to mean that you will soon be fighting the Fed if you buy stocks. He seems to be saying that we will have a tempest of inflation at the same time as better hiring, which, to me and others, would signal that he's got to start raising rates.

We don't want rate increases; we want the free money he's been giving us. While it's true that employment growth is a magic elixir, it is also true that the stock market has accepted Bernanke's pledge to keep interest rates low, and these comments sound like a violation of the pledge.

Given the extraordinary rally we've had -- rising more than 20% in just a couple of months' time -- it is reasonable to expect a pullback from his comments. We've been looking for an excuse to sell and Bernanke has given us one. Nor would I be so glib to say that we should ignore the Fed chief or excuse his comments as not being all that negative. If there's a change at the margin of the Fed's fuel for this economy at the same time as a slowdown from gasoline, you are going to have to roll back some points from this historic rise.

How many? We should wait until tomorrow when we see how the conventional press plays the Bernanke "change" and whether the strategists panic over it.

But it's bad, not good.

And I am cognizant that we need nothing bad to forge our way ever higher after this kind of run.


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