Bernanke's Market Games

Bill Tatro

12/15/2012 12:01:00 AM

 

Stock traders, money managers, financial advisors, wealth consultants, or whatever else you call yourselves (gamblers all), beware, beware, beware! 

Ben Bernanke just provided the cue for when to fold your tent, cash in your chips, and head for the Hamptons. 

The target is 6.5%. 

No one in their right mind truly believes the U.S. stock markets would be where they are today without the cash infusions of the Federal Reserve. 

In fact, fundamental analysis would dictate that because of downsizing, food stamps, oil, war, and any other of a dozen reasons, the stock market should be dramatically lower. 

In addition, technical analysis could also make the case for much lower financial indices. 

So, thank you Mr. Bernanke and that’s the rub. 

He stated that when the magic number of 6.5% unemployment is reached, it will be time to take away the sugar bowl. 

Most people think that number won’t be reached for a few years, thus time is on your side.  However, given the amount of people who are being eliminated each month from the participation pool (the denominator of the equation), there is a real likelihood that the magic number could be reached much sooner rather than later, perhaps as early as mid-2013 if the BLS remains consistent…umm, I mean fraudulent. 

This makes the first Friday of every month a real nail-bitter with the gamblers now having a real vested interest in the contrived BLS numbers supplied by the government, and you never know, the speculators may even demand some truth in the reporting. 

In the past, as the employment data for coffee servers, burger-makers, and part-time greeters improved, the stock market was elated. 

Now, it will be just the opposite. 

Stumbling closer and closer to a professed 6.5% unemployment rate will dictate some gamblers trying to get ahead of others and nobody will have the patience to wait until that fateful day when 6.5% is ultimately reached. 

Indeed, everyone will anticipate each successive jobs report as being some sort of dramatic declaration. 

Perhaps the lesson was recently learned with Apple, Inc.  All the signs were there: An over-owned stock, a mature company, little short-stock interest, and a very weak effort, if not a failed attempt, of explaining the problems associated with iPhone 5. 

Those that got out first did not suffer the nearly 200-point drop. 

Yes, all the aforementioned signs were a matter of opinion which could be argued, however, the 25% decline cannot be debated. 

Ben Bernanke does not release data in order to obtain an opinion; he simply gave a percentage target. 

Yet, successful gamblers don’t make the same mistake twice. 

Who gets out first is the question; the distance from a 6.5% unemployment rate is the answer.  Let the games begin.