Today marks the sixteenth time that Federal Reserve chairman Ben Bernanke has delivered his Semiannual Monetary Policy Report to Congress, and by most accounts, it will be his last. Looking back to his first trip to Capital Hill in 2006 when the former Princeton professor had just taken the helm at the central bank from Alan Greenspan, you find a man who had just raised the Fed funds rate to 4.5% amidst an economy that he said was performing impressively, despite inflationary pressures from high energy costs.
Fast forward to today, and you find the same Bernanke defending the need for sustaining a zero interest rate policy amidst an economy that "continues to recover at a moderate pace despite the strong headwinds created by federal fiscal policy."
While many traders will be hunting for fresh clues from the Fed chief as to when so-called quantitative easing program will be scaled back, Barry Ritholtz, CEO of Fusion IQ and editor of The Big Picture blog, says he thinks investors are looking in the wrong place.
"[With] all this overreaction to what's been called the 'taper tantrum,' I'm not really convinced that this was the cause of it," he says of the sell-off and rebound that has rocked markets since late May. "I think the Bernanke testimony was an excuse to do what was overdone and needed."
Ritholtz points to the fact that stocks were up 16% through the middle of May and had risen at a pace that he says was "completely unsustainable, and wildly overdue for a pullback."
As much as Ritholtz fantasizes that the normally calm and notoriously transparent Fed chief would "bust lose, not hold anything back and tell these Congress critters what he really thinks," he knows that's never going to happen.
Instead, the investment world will dissect two days of question-and-answer sessions, in hopes of hearing something new, when in fact, the only thing that is likely to change at all is the market's interpretation of the inevitable. That is, that someday, the $85 billion a month bond buying program is going to end. Guaranteed.
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