(By Mike Swanson) Hey did you know it is still earnings season? LOL!!! CNBC isn't talking that much about earnings reports and hyping them up, because they are now focused on central bank action. I bet you haven't thought that much about earnings either, because now everyone is obsessed with tomorrow's 2:15 PM and wondering if Ben Bernanke is going to announce a new $500 billion dollar quantitative easing money printing bond buying operation.
Ron Insana said he would on CNBC. Steve Liesman loves the idea. So I guess that makes it true.
Well let me ask you a serious question.
We are in a very close Presidential election. Would you like to be Ben Bernanke and announce bond buying right before the election and cause the stock market to go up and help President Obama get reelected? I don't care if you like Obama or not. That isn't what I'm asking.
What I'm asking you is would you like to be known as being responsible for getting a President re-elected?
You see if Bernanke buys bonds and forces the stock market higher and Obama wins - which would be likely if he does a money pump - then that is exactly what people are going to say. Some will wonder if some sort of hidden deal hadn't been made.
That's why the Fed almost never does anything big right before an election and only does so if it truly has to. And in this case it doesn't. The stock market isn't even down but a few percent off of its high and money pumping won't do anything to help the real economy so people will rightly wonder if Bernanke is simply trying to keep his job by helping Obama.
So I don't think you're going to get QE tomorrow no matter what the talking heads say. We'll just get a statement talking saying rates will be kept lower for even longer than the said before, maybe 5 or 10 years longer. Why not? It's a crazy thing to say 2 or 3 years longer so why not 10. And with that statement will be a pledge to consider bond buying if needed.
Oh, and in their minds it will be needed at some point.
Now what about the European Central Bank? There is thoughts that they are going to print money too on Thursday and supposedly end the Euro crisis. Well again if they do anything it will be a limited operation of the kind they have done several times the past few years. Each time in the past they got yields down for a few months for Italy and Spain and then they went up again. And forget about Greece. Bailouts there have been a miserable failure.
I do think they have bigger plans they will reveal later this fall, but right now are just buying time.
So I don't think we are yet at a game changer situation. I know that is against what most are saying.
Whatever the case the market shot up huge last week and we'll probably see some profit taking at the end of this week and next. I'm really interested to see what the market does Thursday and Friday after the ECB meeting.
I don't think we have hit a V bottom for Europe and most world markets, but are making a transition from stage three bear markets to stage four basing phases that will lead to new bull markets at the end of this year or early next year. Such transitions don't happen in a few hours but usually take place over a few months. When the US bailed out its banks with trillion dollars of taxpayers money in the Fall of 2008 the bull market didn't start for about six months.
I am going to put out my monthly newsletter this weekend instead of the first of the month on Thursday, as I want to see what happens next few days and do some more studies before writing it.