If the front page article of today’s WSJ is any indication, Bernanke’s testimony on the economy and monetary policy will be anything but boring. Bernanke lays the groundwork for some of what he’ll say in an editorial that lays out “The Fed’s Exit Strategy.” It sounds great but if the Fed gets the timing wrong, his best laid plans will be all for naught. Also, when the time comes, how will the US economy handle a normalized fed funds rate up from essentially zero and normalize I define as a fed funds rate two points above the CPI which is about the average going back 30 years. For now, it’s just an academic discussion as Ben said “accommodative policies will likely be warranted for an extended period.” Earnings season continues on a solid track but Revenue season remains weak as CAT, UTX, DD, BJS, PNR, LXK and KO all missed revenue estimates. Big earnings leverage though will be evident in the 2nd half IF revenue picks up.

Category: MacroNotes

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

One Response to “Ben comes to the Hill”

  1. JohnnyVee says:

    That’s the $64k question: Even if the fed returns rates to normal, how will the economy?
    Answer: It will tank.