We thank the good folks at Credit Write downs for providing the soundtrack for this quarter’s Broyhill Letter which is posted below.
In addition to unconventional monetary policy, our beloved Fed Chairman has now resorted to unconventional media policy (immediately following the FOMC meeting) to further flame investors’ animal spirits. In a recent Washington Post Op Ed, Bernanke explains that Quantitative Easing “eased financial conditions in the past and, so far, looks to be effective again. Stock prices rose and long-term interest rates fell when investors began to anticipate the most recent action. Easier financial conditions will promote economic growth.”
In other words, if I can blow another bubble in asset prices, I believe all our troubles will wash away in liquidity. Good grief. Anyone seeking a dose of reality should read QE2 blunderbuss likely to backfire in the FT before placing blind faith in the Fed.
“Maybe Ben Bernanke will make the VIX go to zero and we’ll all win every day. Maybe not. We do not think this will end well. If anything, the next market crash could be perpetuated by the Fed itself.”
Keith R. McCullough, HedgEye Chief Executive Officer