Bernanke's losing battle?

In this installment of Investor Beat: The Fed chief tells Congress that it's too soon to end the stimulus program.

By Motley Fool Investor Beat May 22, 2013 4:58PM
Federal Reserve Chairman Ben Bernanke testified before Congress Wednesday and said that the U.S. job market is still weak. Bernanke said it's too soon for the Fed to end the stimulus program. 
 
What do Bernanke's comments mean for investors? Where can investors find value when the Fed does begin winding down its quantitative easing policies? In our lead story on Investor Beat, Motley Fool analysts Matt Koppenheffer and Matt Argersinger tackle those questions.

Federal Reserve Building (© Hisham Ibrahim/Corbis)Also making news during Wednesday's market action, and covered in Investor Beat:

  • Shares of Lowe's (LOW) hit an all-time high on earnings news.

  • Shares of JPMorgan Chase (JPM) hit their highest point in a decade a day after shareholders voted to allow Jamie Dimon to keep his dual role of chairman & CEO.

  • Target's (TGT) first-quarter profit fell 26% and the retailer lowered guidance for the rest of the fiscal year.

  • Shares of luxury homebuilder Toll Brothers (TOL) rose on a 46% jump in quarterly earnings.

And we close Wednesday's episode with two stocks to watch. Matt Argersinger's got GameStop (GME) and Matt Koppenheffer is watching Annaly Capital Management (NLY).


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26Comments
May 23, 2013 3:43AM
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Uncle Ben and his Corporate Masters, Big Banks, haven't lost a penny and certainly not the current Battle. In fact, they are making more now, than ever before. Uncle Ben is just doing what his Masters ask of him, to complete the transfer of  most Wealth to the very top. The rest of us can have the crumbs,  maybe. The Fed deception continues. The Big Banks Scams continue.
May 22, 2013 6:47PM
May 23, 2013 9:25AM
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Infrastructure spending?   This creates TEMPORARY demand that goes away as soon as the spending stops.  It does not create ANY growth as the end product produces ZERO profit.  Worse still, every nickel spent by government on such projects has to be first TAKEN OUT of the economy, thus destroying more jobs than it will create.  This is why when Obama spent 860 billion on 'infrastructure' unemployment soared from 7.2% to over 10%.  

The way to create jobs is to create REAL, SUSTAINED DEMAND.   The way to do that is to put  money into the hands of those that WORK.  That is done by cutting TAXES and government SPENDING.  Consumers create REAL DEMAND.  Their DEMAND creates real profits, and thus growth and jobs.

The problem we have is that Obama thinks he can put money into consumers pockets by Taxing them more...  How is that working out for ya?
May 22, 2013 7:59PM
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Not all asset classes will inflate eqaully as we have already seen. Equities are now higher in many sectors, except banks and real estate, then they were in 2007. Obviously, gold and other precious metals when way up even though the current hype on gold's 20% retracement. It's interesting to study an investment like Annaly (mREIT) and see the differing opinions. FED will stop buying MBS so rates will have to go up but will the spread go up too and can NLY swap existing MBS for higher rate MBS?  Only time will tell I wouldn't see all of your gold just yet and diversification is your friend.
May 23, 2013 8:38AM
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I'm not really sure that some understand what Bread and Soup lines are...

 

Although Food Stamps, EBT, and SNAP are somewhat similar, they are absolutely not the SAME !!

EBT participants are not in a soup line.

Many still have jobs(maybe underemployed) have homes or a place to stay...Have families groups still together...And several "no doubt" are taking advantage of the system..

When that system fails....It can turn into a Depression.

NO Jobs, No Homes, No shelter, worthwhile; And total families are in despair.

Hence the Nation is in Failure..the poorer and middle classes are wiped out..

And all they have left is what can be begged on the streets, when that percentage gets too high we are in major castastrophe...No one will be driving around to food banks in a SUV, except the rich.

May 23, 2013 10:14AM
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That's just horsesh!t Mirage, all this was layed in place LONG before Obama...

And you had better look towards your Congress to see 90% of the PROBLEM..

 

Ending two Wars, would be a good start; Plus cutting Defence Spending; That can be done without hurting any of our troops or numbers.

Quit giving gd money to these nutballs in the Middle East...and some other places.

And use that money to generate "real jobs" back here.

Yes infrastructure jobs are real jobs, and can help to sustain businesses and spending in other sectors of our economy...Yes a true trickle down effect.

Projects of those sorts have helped pull on our bootstraps before..

And the Corporate World and the Rich are too goddamn absorbed within themselves to help put America back on it's feet...They should be ashamed...But instead spout about Political treatment..

Political Treatment....My Azz......They've got it made. 

May 23, 2013 11:40AM
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Yes that was not a "TAX INCREASE"...It was a tempoary GIFT for people to buy fuel and groceries.

Until their lives got a little better.

And it was hurting SS solvency temporarily.

You stupid Republicans should really get your facts straight, before talking about tax increases.

And QUIT lying about it..

May 23, 2013 11:15AM
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The War in Iraq, is essentially wound down, Big mistake we are still pouring money into the bastard's coffers...CONGRESS is allowing this to happen !!!

We have a timeline on Afghanistan...Again we are supporting monetarily WAY TOO MUCH to the rest of these scumbags in the Middle East and North Africa...That includes Israel.

Let Russia/China support them...

Bring those monies back to American soil to fund or redistribute to our people.

The Wealthy or Corporate Moguls, can die with all theirs as far as I'm concerned.

 

May 23, 2013 11:27AM
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Putting the payroll tax, BACK where is always should be, isn't really a tax. It's restoring something that Obama never should have stuck his compromising, serving all masters, hands in. When Obama praised the payroll tax cut, he was at the same time, cutting funding for Social Security. Cutting it when folks where already claiming the Fund would be running out in a few Decades. So sure, some might look at that, and their checks and cry foul. You should have been crying foul that Obama was dumb enough to mesh with Social Security via the Payroll Tax Deduction. Putting SS in more Jeopardy because of the politics and his faulty math.

Again, the vast majority of Consumer, aren't pay higher taxes. The payroll tax thing was like not paying into your retirement 401K, now you are just returning back to paying into that fund, the full amount as per normal. That's how it stays viable. Now it's funny how some won't say Obama ever cut taxes via payroll tax. They only mention it when they want to push a Agenda. It was Obama that pushed for that tax reduction, and it was and still is, a bad idea. Now, most in congress are glad that's over, too bad they will only steal from a return to full payments. That has to change.

May 23, 2013 9:42AM
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First of all, the vast Majority of Consumers aren't paying higher Taxes. So asking folks how that affects them is stupid. You would first have to have Corporations paying a Living Wage before you have to worry about a higher tax bill. Well in spite of all the noise concerning Corporate Taxes, they continue to have Record Profits and Record Earnings. How is that working out for the average Worker?

Infrastructure spending, creates the framework that keeps the economy working. In fact, companies won't even come to many local or state areas, unless you spend to upgrade your Infrastructure. That alone shoots holes in some folks theory about what infrastructure spending, does or doesn't do.

They way to create more jobs is increase the Average Workers Wages. The more they spend, the more JOBS are Created. Giving more to the already Wealthy doesn't work. They hoard cash, regular folks spend it back into the economy. They send jobs overseas and their cash to offshore entities, paying slave labor wages and little to no taxes. How it that working out for ya?

May 22, 2013 6:24PM
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The QEs had the effect of creating wealth in various asset classes such as in real estate and the stock markets as well as allowing the refinancing of business loans at lower rates reducing their expenditures.  The goal was to reduce expenses to both consumers and businesses,  provide capital liquidity to a monetary marketplace that had lost trillions in commercial paper, backstopping banks and allowing them to recover from their losses in the commercial paper they held.

Was it worth it?  Only history will tell.

May 22, 2013 8:52PM
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LOM...Got our message, pretty much what I'm doing with REITS, for about another Quarter ?

 

LOSING BATTLE....Hardly, we do not have 30% of the population standing in bread and soup lines.

The Economy is on the mend in many fronts; The Markets are hitting new highs; Although neither are the same, but do have entanglements.

NO ONE promised a quick recovery as in past recessions...Housing and Jobs were going to be major lagging indicators..This has been known for years.

Cooperation at higher levels of our Government has been insane..A "STILL" dysfunctional Congress, and a President that seems afraid of his own shadow somedays?

Global Economies in mini Chaos....And we are the one that is considered a "safe haven" ?

 

Supposedly the Recession is over, I'm not convinced either?? But  using "accepted indicators" we are coming along...

Inflation under control, same with deflation as far as I read....

QEs unwinding..

The Government still has to CUT more spending, Wars need to be ended and Foreign "corruption monies" need to be stopped.

The Government and it's American people need help and guidance to find our ways.

I'm ashamed of the Corporations, Capitalist, Rich and Elite for not attempting more ways to help.

NOT ALL are bad apples, but monies need to repatriated, and not excuses or explanations of how they are following the "laws of the land."

Make deals on incoming for taxes, whatever?

But bring back the Wealth of our Nation, from where it was made and taken from..

The Americans that helped you make it, now need your help; And you turn a Blind Eye..

May 22, 2013 6:58PM
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Psyched and bubblemania.  It is true.  There are some voices who maintain that the stimulus was insufficient to produce the momentum to re-start this ailing economy.   I have to agree.  If we had a real jobs bill (something to rehab the infrastructure, for example) passed in 2009, we would have been on our way to true middle class rebuilding and wider prosperity by now.

Still anemic growth is better than the alternative.

May 22, 2013 6:54PM
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In practice, the only option for Bernanke is to press on with his QEs. Actually, he needs to accelerate it and gain traction, other wise it will be a huge disaster. Independently of how I see it, conceptually, it´s really like the too-big-to fail situation. Just can´t let it reverse.
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