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Bernanke's FOMC Speech - Investors Must Now Prepare for Risk and Riches
Pinnacle Digest writes: Prior to Bernanke’s FOMC speech last week, Gary Tanashian was bullish on the market. Interestingly enough, he had been bullish for quite some time and wasn’t really factoring in what a QE3 could do for the market. As he explains, prior to the announcement the technicals looked strong for quite some time. And given that it was the Presidential cycle, he believed the markets were due for a continued rally (and history says he’s right about that). Sentiment indicators were also pointing for higher highs. Now that QE 3 is here, he is a tad concerned. Tanashian stated “Sentiment is becoming dangerous, speculation is breaking out and liquidity warning indicators like the Gold-Silver ratio, US dollar, US Treasury Bonds, TED Spread and LIBOR have all been dispatched on a southward journey in the interest of greed, speculation… and desperation.”
With the US and Europe conspiring to depreciate their currencies (US is much more aggressive), the market is blindly buying anything that benefits from inflation. Investors have written off the possibility of deflation given the latest from the Fed and what is expected to transpire globally - a currency war. But is inflation really an inevitable outcome? How long will it last? What are the ramifications?
Many investors seem to be throwing caution to the wind without seriously analyzing those questions. Tanashian, however, took the time to look at the inflation v deflation argument in his latest article. He shows some key indicators to look for when trying to figure out when and if Bernanke will act again - or in the case of QE 3, how long it may go on for.
We are in unchartered waters, with the possibility for anything. While we believe inflation is here to stay until this bubble in the equities market bursts, risk is at levels not seen in decades.
Tanashian states “Be ready for anything; like risk, riches, marshal law, the system’s end or a brighter future. We are going off the balance sheet and off the charts. Okay, now NFTRH 204 reels in the loony talk and returns you to your normal programming.”
Click here to read Gary Tanashian full article on the subject.