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My personal musings about anything that gets on my radar screen--heavily dominated by politics.

2006-02-16

I Like The New Fed Chief

Larry Kudlow has a good set of observations on the first appearance of Ben Bernanke before Congress (courtesy RCP). Some of the key thoughts:

After two days of Congressional hearings, new Fed chairman Ben Bernanke delivered a “not-too-hot” and “not-too-cold” testimony that reassured financial markets, driving up share prices by roughly one percent across-the-board, while gold, bonds and the dollar were flat.

During his hearings, Ben Bernanke gave the Bush tax cuts credit for economic recovery. Mr. Bernanke also pledged to keep basic inflation around 2 percent or less, and he narrated a positive view of the economy. . .

His biggest concern on the inflation front seemed to be a spillover effect from higher energy prices. But that hypothetical thought is being overtaken by events in the energy trading pits, where gasoline prices are plummeting and crude oil has dropped below the $60 dollar a barrel threshold. With energy inventories high, lower prices will pull down inflation rates in the next couple of months . . .

Notably, Bernanke not only credited tax cuts for economic recovery, he also endorsed school choice and vouchers for better education performance.

While I'm not sure the final two items are really part of his docket, I do think it's hard to miss that the Dow Jones has closed above 11,000 three days in a row, today over 11,100. NOw, I'm not one to get too excited about the Dow--as I've noted before, I don't think rational behavior has a whole lot to do with the stock markets--they do seem to indicate that the financial world is pretty comfortable with BB at the Fed.
Posted by: Michael / 2/16/2006 11:01:00 PM

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