Bernanke Blinks And Addiction Goes On

Hello traders everywhere! Adam Hewison here, President of INO.com and Co-creator of MarketClub, with your mid-day market update for Thursday, the 19th of September.

I have been saying for some time that the Fed is not going to do anything until January 2014, when there will be a change in the chairmanship. It goes back to that fundamental human trait of "wanting everyone to like me." I think Ben Bernanke wants to be seen as a benevolent Fed chairman when he retires in 2014. This is classic Washington politics, where the Fed chairman gives a very gracious speech saying that it's been a challenge and he enjoyed his time as chairman of the Fed, but he'll leave out the part where it's not his problem now.

Whoever becomes the next Fed chairperson will face monumental challenges trying to extricate the country out of this spending binge and gluttony of cheap money. I suspect that had the Fed known they would be no further forward in 2014 when they took this quantitative easing course four years ago, they would have chosen another course of action to stimulate the economy.

Here is a quick question for you, how many zeros are in $1 trillion?
The answer is 12.

1,000,000 = million
1,000,000,000 = billion
1,000,000,000,000 = trillion

A trillion dollars is an extraordinary amount of money and we have been spending pretty close to that every year for the last four years, and the economy is still struggling. Capitalism doesn't work when you artificially suppress real supply and demand thinking that will support or keep prices in check. Free markets work and have always worked when they are left alone.

Yes, we have had boom and bust periods over the last 100 years of capitalism, but that is how it is supposed to work. Businesses come and go, it is all part of the business cycle. Businesses are allowed to fail and go out of business and there is always another company ready to pick up the good pieces and move forward.

The market continues to be obsessed and addicted to the free money of QE. In my book, addictions don't usually turn out well, so be prepared!

I will be examining the following stocks today in this report:

Netflix (NASDAQ:NFLX)
Pandora Media (NASDAQ:P)
Tesla (NASDAQ:TSLA)

Please feel free to leave a comment on any of the stocks mentioned today. You can also comment on anything else that you may have found interesting in the market that I might have missed.

Have a great trading day,
Adam Hewison
President, INO.com
Co-Creator, MarketClub

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Adam appears frequently on the following financial news channels as a guest expert. Click on any cable logo to watch Adam's latest appearance.

15 thoughts on “Bernanke Blinks And Addiction Goes On

    1. Martin.

      Thanks for taking the time out of your day to contribute your view point and comments.

      Cheers,

      Adam
      Adam Hewison
      President, INO.com
      Co-Founder of MarketClub.com

  1. Bernanke is misunderstood by wall street and all the critics his mission is to destroy the petro dollar which happens to be U.S. dollars , it's a $0 dollar Islamic principal war , or if one casually or off the cuff were to say these peoples freedoms are 200 years behind the western system. So they need a civil war / uprising to bring them into this century. But remember they are fighting back also , Islam vs Capitalism is the true war or the Islamic belief of not charging interest on money . So now embrace Ben and go plan your your next move , checkmate. Hmnnn! .... Choose - Would you rather live the American Dream or the Islamic way of life .

    1. Donald,

      Thanks for you feedback.

      I immigrated to America to live the American dream and so far it is working out pretty well.

      Thanks for taking the time out of your day to contribute your view point to this conversation.

      Cheers,

      Adam
      Adam Hewison
      President, INO.com
      Co-Founder of MarketClub.com

  2. This is no addiction - it is a necessary stimulus to the economy in the face of government being paralyzed by traitors in the Congress from taking any fiscal initiatives to get the economy moving for working people. Tax cuts for the rich and cutting food stamps for the desperately poor do not stimulate the economy - that question was settled long ago for anyone in the reality based community.

    The fact of the matter is that there are people conduction open economic warfare against the United States of America, in what is best described as the the beginning of Civil War 2.0. Another salvo was fires across the bow on the "justice" front when Tom Delay walked despite his blatant criminality.

    The Fed is doing what is right under ugly circumstances to prevent this economy from repeating the 1930s, as is the desire of many of the politicians, most, but not all, of the radical right who deserve to be tarred and feathered.

    1. Sorry, typo: "conducting" open economic warfare against the USA.

      "fired across the bow." Thought I could edit the post after hitting the button.

  3. I have thought about standing outside Walmart with a sign: "Answer One Question for a Buck", and that is "which is bigger: a billion, a trillion or a gazillion?" (but I am not sure how much I would have to shell out for a valid study)- the declining level of U.S. education makes me think the average person only knows that his grocery bill is going up and not what a fantastic sum a trillion is. (the physicist Richard Feynman joked "I used to think a billion was an astronomical number but now it is an economic number"- that little joke has since expanded an additional three powers of ten. Half the guys killed in the Munich Beer Hall Putsch were bank tellers- that struck me as odd until I realized they were sick and tired of customers complaining they had been shortchanged a billions marks

    1. Robert,

      You nailed it!!!

      The level of education and just general knowledge in America is at an all time low. We have thrown billions and if you count the student loan debt over a trillion with 12 zeros at the educational sucker trap and what have we gotten in return dumber and dumber kids.

      I like Gregory Canada's solution in the documentary "Waiting for Superman" if you get the chance watch it, it's an eye opener.

      Once again thank you for participating in the conversation.

      All the best,

      Adam
      Adam Hewison
      President, INO.com
      Co-Founder of MarketClub.com

      1. Dear Adam,

        I now teach Electrical Engineering in Boston, and I have lived and worked all over the world, predominantly in Australia and Japan. Your comment that we have "gotten in return dumber and dumber kids" for our trillions in student loans that we have used to educate them reminded me of an article that I read about the positives that came out of the depression of the '30's. Because we did not "bail out the bad guys" in the 30's, and instead let capitalism take its course, which forced failed bankers (too much margin debt) to jump out of windows on Wall Street, more and more students of that generation found themselves "forced" into pursuing degrees that actually contributed something to society, like engineering and the sciences, rather than degrees that contribute little, like Humanities and Business (I can say that because I have two Humanities degrees, as well as my postgraduate Engineering degrees). Vocational trades also picked up in the Depression, and the young people displaced by the WPA and CCC programs found their new husbands and wives while planting the new forests of the northwest and Midwest.
        All these things revitalized America to hold it in good stead when it came time to fight World War II. Had we instead gone the Bernanke way--We would have lost World War II. That makes me wonder what is going to happen to us this time. We have a new World War brewing--but, we have a bunch of English majors and Hospitality majors that are going to represent us this time--rather than scientists, engineers, welders and carpenters. I think that in the end, we will have really let our children down by not allowing them to "reach for the stars, and become victorious", as our parents did.

        Something to think about, Cherubim

  4. It may be a Million, Billion or Trillion, Who Bothers about "Zeros" ??? let it as much as it is.

    economy will be struggling for an uncertain period, because no one is ready to accept or follow this reality that pumping of more and more and more money in the economy is not a way to solve problem, but contradictory, it is creating more and more inflation and more and more difference between rich and poor public, and "Drug itself proven more dangerous then the deices and Pain".

    1. Rasesh,

      On my wall in my office I have a large framed poster which simply says, " There's no free lunch"!

      Sooner or later we are going to have to pay for this mess and Bernanke will be long gone by that time.

      Once again thank you for participating in the conversation.

      All the best,

      Adam
      Adam Hewison
      President, INO.com
      Co-Founder of MarketClub.com

      1. No one will ever be able to pay for this mess. As in, ever. The numbers easily prove that.

        The trite comments like "your kids and grandkids will pay for it" is not accurate as well. They won't be able to either, not even close.

        It's too little, too late. In fact it's so far out of control, and has been, that everything else is a sideshow and a distraction. It's well past the point of ever "fixing" it, and well past the point of destroying it further with health care, or anything else. The truth is ugly, and it hurts.

        1. Comments are not accurate (typo) as espoused on TV ..... the MSM wants you to believe since nothing has ever gone badly wrong being technically insolvent, then nothing ever will.

        2. Spette,

          Thanks for taking the time out of your day to contribute your view point and comments.

          I agree with your comment that the " The truth is ugly, and it hurts." Don't expect any politicians ever to admit that.

          Cheers,

          Adam
          Adam Hewison
          President, INO.com
          Co-Founder of MarketClub.com

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