Bear Market Bernanke Strikes Again

Last Thursday the market reacted negatively to yet another presentation from the Fed. In what should have been an opportunity for Fed Chairman Ben Bernanke to spur a rally, the market didn’t cooperate.nnIn his testimony to the House Budget Committee, Mr. Bernanke said he supports an economic stimulus package that will help avert a recession. He joined President Bush in endorsing such a package.nnYou would think that this would have helped the market, but you would be wrong in your thinking. Overall, Mr. Bernanke’s comments were positive. However, a few comments caused concern. Here are four headlines from Briefing.com that I personally found unsettling and perhaps the source of the concern.nn10:01 Bernanke says economic outlook has worsened, downside risks to growth more pronounced n n10:01 Bernanke says if fiscal stimulus came too late might do more harm than good n n10:01 Bernanke warns of 'daunting long-run budget challenges' nn10:00 Bernanke says financial situation remains 'fragile', many funding markets still impairedn nnI don’t think the market still totally trusts Mr. Bernanke. Most of what he said was positive from a forward-looking perspective. But the market chose to focus on the few cautionary comments.nnI shouldn’t blame the downswing entirely on the Fed chairman. The Philly Fed survey came out on Thursday as well, and it was terrible. However, I think the market could have shrugged this off if there was more confidence in Bernanke.nnI happen to agree with the cautionary statements that were made. However, not everyone is watching my every move, so my thoughts don’t hold the weight of Mr. Bernanke’s. I would think that someone would be coaching him on how to present bad news to the market rather than just shouting it out.nnI have been accused of being outspoken and brazen to some degree, but even I know how to break bad news to someone and soften the blow. We can only hope that someone teaches Mr. Bernanke how to do this, and it had better be soon.nn