This blog post originally appeared on RealMoney Silver on April 27 at 7:34 a.m. EDT.
This afternoon's press conference by Fed Chairman Bernanke will be a nonevent. For the past few weeks, commentators in the business media have been obsessed with this afternoon's press conference, the first of its kind by a
It will be a nonevent for several reasons:
- The Professor vs. the Media. Chairman Bernanke is well versed in Fed doubletalk; he will reveal very little that hasn't already been communicated previously. Bernanke knows his subject matter better than his questioners in the Fourth Estate; as such, he knows exactly what to expect and how to respond in today's Q&A session.
- Today's Fed Dual Mandate. This is the first step toward more Fed transparency. In part, Bernanke thinks this is a good idea; in part, it is in retaliation to the anti-Fed cabal in Washington, D.C. But, first steps are typically baby steps that will not be revelatory. (Such is life!)
- Same Old, Same Old. Investors already know what to expect from the Fed; there will be no substantive surprises. Bernanke will emphasize:
- the continued weakness in the U.S. residential real estate markets;
- the likely continuation of a zero interest rate policy into next year;
- the end of QE2 (at its originally scheduled time slot); and
- that there are no current/immediate plans for QE3.
My personal view, which remains solidly in the minority, is that the public relations associated with today's press conference is not an antidote to the secular challenges facing the domestic economy, which are
by the absence of sensible (fiscal and monetary) policies.
It is clear, however, that most market participants remain focused almost solely on the extrapolation of the strength of the current corporate profit reports (especially of an industrial kind). The near-term issues associated with quantitative easing -- such as the 8% to 9% drop in the U.S. dollar (against a basket of currencies), the rise in commodities (particularly of an energy kind) and the penalty placed on our country's savers -- continue to be ignored by investors.
In conclusion, Mr. Market's strength is not likely to be upended by anything said today by the bearded Princeton University ex-professor who now chairs the Federal Reserve, as monetary policy will remain loose for the longest time.
Doug Kass writes daily for
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Doug Kass is the president of Seabreeze Partners Management Inc. Under no circumstances does this information represent a recommendation to buy, sell or hold any security.