Stock and Bond Market-Timing: Can it be Done? Message Board

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Strategies & Market Trends : Stock and Bond Market-Timing: Can it be Done?

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Dec 22 4:00 PM EST

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From: Honey_Bee	3/25/2013 11:05:21 AM
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Summary of Bob Brinker's Moneytalk show is now posted. Excerpts: STOCK MARKET: Caller Dave from Illinois asked Brinker if the Federal Reserve pumping money into the economy was driving the stock market going up. Honey EC: Brinker gave a long answer to Dave's question that includes a lot of other information about what the Fed is doing, it's affect on money supply, inflation, interest rates, unemployment and the stock market: Brinker replied: "It's called Quantitative Easing....The Federal Reserve is buying under the current round, which is technically, the fourth rounds....is purchasing $85 billion a month in U.S. Treasury and Mortgage-Back Securities.....And that put the money into circulation....No question that has flooded the market with money...And that is one main reason that rates are so low is there's money everywhere....Why did they do it? They started to do it in 2008 to avoid a collapse of the banking system." Brinker continued: "Why have they continued to do it? They operate under a congressional order that says they have to maximize employment while maintaining the stability of the dollar. Now that's measured in inflation terms.....That's defined right now as Core Inflation of less than 2% as measured by the Personal Consumption Expenditure Index. And that's where inflation is. It's 1 and a fraction using that Core Index. Therefore they're trying to create conditions favorable for job creation to get down the unemployment rate which is way to high at 7.7%. They want to get it down to 6.5% or less.....That money is out there in the financial system. Does some of that money find its way into the stock market? Of course it does. That's one of the reasons you're looking at record or near record prices on major stock indexes. Because of the fact that there has been so much liquidity created under this monetary policy." Read more

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