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Him or hate him it's undeniable -- fed chair Ben Bernanke affects the market like no other individual in the world and no analyst has a closer view inside the workings of mr.
Then our next guest Wall Street Journal reporter John fields of grass and back John's article about the Fed mapping out an exit strategy from the -- Extraordinary era of money -- help she'll look the market -- so John UN Ben Bernanke got to get both you guys can it can affect the market of course.
You do so based on what he says and what he's planning to do but.
We today we had to it was a strange tickets we had -- on this the messenger.
-- trying to explain what's going on inside the place yeah we're not gonna kill the messenger trust me but but today there was there was good news under retail so I was kind of -- markets go up because.
But because of this concern.
About what's gonna happen -- with the Fed.
The market ended up down -- of a lot of investor percent that was specifically what.
Why why don't we still but we get good news -- retail we get good news on housing why do we still need the Fed.
Putting up all -- money buying all these bonds if the news is good from the economy.
Well I mean I think that's the question that they're going to be asking themselves for the next few months if the data keeps coming in strong they're going to be asking themselves.
Do they need to stick it to keep doing this in these keeps continue buying the bonds.
And I think for the markets that puts them in an unusual position where.
Good and you know this happens in any cycle actually you know when you're at this point good news isn't completely good news from an investor's point of view.
Because while the economy is getting stronger -- might mean that the easy money won't be around for very much longer.
You know in a world weather wasn't QA the Fed was is raising and lowering short shorts -- magistrates it would be the same thing.
If there was really strong day of the mark would -- maybe the Fed's gonna start raising rates and what have the same effect well.
It's it's obviously great news for the market the markets love cheap money because allows companies to borrow money for practically nothing in that lowers their cost increase their profits.
But is there a sense.
In the Fed anywhere in the -- not just from Bernanke and his people but from the other people that.
There's sort of be irrational exuberance if you will to -- or phrase from Al Greenspan.
Is is there any view that that that the stock market might have become a bubble pumped up by these cheap dollars.
And I don't think they think this stock market is a -- like if you look at PE ratios it doesn't look like they're crazy overblown the way they -- John with the lord with all due respect you John I I appreciate your views on this -- just wondering if anybody in the Fed is sales and this is yeah right so so that's what I was gonna get during the short answer your question is.
Yes there watching that very closely and I think they're more concerned about that right now than they are about inflation.
Because inflation is so -- There's differences of opinion Bernanke and so you know on the other some other top people -- don't think it's a bubble yet.
But they're watching it closely and you know after the way the last two cycles ended with the tech bubble bursting of the housing bubble.
Bursting they've got to be watching it very personally.
But it's not it's not at a point where they're ready to pull back because of it.
-- but it hit there -- there is a group of people that is it would argue and I think they did make a fair case that they are hurt by current policies.
And that's the sabres protect Quayle had a lot of folks around my age the baby boomers were looking in the future who don't wanna play the market like they did when they were younger and -- now with 0% interest rates.
If they're fixed income sabres they're getting killed it by this policy does that concern anybody the fat.
I yet they talk about that a fair amount I quoted a guy Richard Fisher in one of my stories the last couple days.
-- talked a lot about that issue.
But you know there's a conundrum there too because let's say the Fed turned around and started raising interest rates so that you can earn 2% on your deposits instead of zero.
Well -- kind of world we could see stocks falling and we could see home values falling and so it's not like sabres do a lot better.
And that kind of environment either I mean I think it's a damned if you do and damned if you don't environment.
In a world -- had a financial bubble I -- the big problem after all this because it underline all this stuff is that.
We had a financial bubble and we're still trying to crawl our way out of that hole.
Okay they're give me rap but I got to ask two quick questions was quick as you can be -- appreciate that.
Does the Fed seem more likely to increase their bond buying or pullback that's the first question and the second question is like a presidential press coverage.
Go for a third term because he's about to wrap up his second term.
They they seem to be more likely to pull back at this point and Bernanke certainly doesn't seem like a guy who wants.
To be around for another -- wow that's interest in news -- not -- -- be at the the meeting at Jackson Hole -- -- say he -- not -- interest in the third -- I mean I think that's the message is a lot of this you know friends and colleagues have gotten.
From -- -- the body language at least.
There's a question whether Obama would try to talk him into a third term we have a big story on our front page today about.
The vice chair who Janet Yellen who might be -- -- likely to succeed and there are a lot of people.
Who could be out there -- Obama could look look at but you know.
Bernanke looks like a guy who is ready to move on to the next chapter in his life and enough John hills and wrap the Wall Street Journal John always a pleasure to see you thank you so much -- love and appreciate it -- --
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