Monday, August 29, 2011

What do equity markets want?

The Bernanke speech at Jackson Hole did not provide any monetary policy help for the markets. In fat, the focus was on the inability of monetary policy to help in all situations. The job must be on fiscal policy and the government has to get its house in order.

Yet, we are seeing equity rally based on the view that the US economy is not doing that bad. Bernanke stated that help is not needed, so now we have an equity rally?

This is odd given the falling forecasts from most economists and a revision downward of the CBO growth forecasts. There is little to drive markets higher.

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