Ben Bernanke has a generally positive disposition. In 2005 for example, he claimed that a housing bubble was a 'pretty unlikely possibility.' Even in 2007, Bernanke went on record to state that the Fed 'does not expect significant spillovers from the subprime market to the rest of the economy.'
Regardless of what your definition of a 'significant spillover' is, it is safe to say that his assessment missed the mark by a wide margin.
One of the Fed's more recent remarks reflects quite a change from the cautiously optimistic stance it displayed over the past year: 'Financial conditions have become less supportive of economic growth.' Wow, that's not good.
The ETF Profit Strategy Newsletter, one of the only outfits that predicted the massive rally from the March 2009 lows (via the March 2, 2009 Trend Change Alert), always maintained the opinion that this rally is a counter trend rally.
On April 16, 2010, the ETF Profit Strategy Newsletter stated that: 'The cork seems to have popped. Reality is setting in. Despite the market's resilience against any sort of pullback, we need to point out that historically, there has rarely been a more pronounced sell signal.'
At that time, we also took the liberty to shed some light on statements made by Ben Bernanke or the Federal Reserve, and interpret the real message between the lines.
Fed Statement:
'The staff did make modest downward adjustments to its projections for real GDP growth in response to unfavorable news on housing activity, unexpectedly weak spending by state and local governments, and a substantial reduction in the estimated level of household income in the second half of 2009.'
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