Long time readers or market observers will remember the infamous David Tepper (hedge fund manager) call on CNBC ahead of QE2 in 2010. Essentially "the economy gets better or the Fed will come in – either way you have to buy stocks." Whatever Bernanke said early in the day didn't seem to make markets happy but as the day passed the view of his answers changed. Most likely by the financial media – nowadays it's a lot of perception by the financial infotainment that shapes views. So if Mr. Liesman says "Bernanke clearly is saying it's coming" then this skews the belief system, especially in the short run. And you get guys like Brian Kelly shouting on the CNBC that you must buy stocks yada yada.
“Now, you have to be long stocks,” says trader Brian Kelly, founder of Shelter Harbor Capital, after Ben Bernanke concluded his testimony before the Senate. “There is no other choice.”
Kelly as well as many other market pros believe that Fed Chairman Ben Bernanke just telegraphed that QE3 must be factored into all future trades.
“He talked about the second quarter coming in below 2% and he talked about the jobs number failing to improve,” Kelly says. “How much more do you need to hear!"
And as the Fed nudges closer, Kelly believes investors need to put money in stocks. That’s in part because once the Fed moves, Kelly doesn’t think they will move subtly.
“Whatever comes along next, it's going to be big,” he says. And you want to be in stocks before it happens.
Again none of this has to do with earnings, revenue, margins or even the economy – it's all game theory on central bank action and has been for quite a few years now.
Any securities mentioned on this page are not held by the author in his personal portfolio. Securities mentioned may or may not be held by the author in the mutual fund he manages, the Paladin Long Short Fund (PALFX). For a list of the aforementioned fund's holdings at the end of the prior quarter, visit the Paladin Funds website at http://www.paladinfunds.com/holdings/blog