Bernanke: "QE2 Contributed To A Stronger Stock Market" As TrimTabs Predicts More QEasing Ahead

Tyler Durden's picture

During today's little CNBC circlejerk shindig, Ben Bernanke, in defense of his disastrous, and now deadly policies, once again confirmed that the (one and only) benefit from QE2 has been to boost stock prices. Oddly enough, there was no mention of surging energy, food and commodity prices. Nor did Liesman ask the Chairman about 43.2 million Americans on foodstamps, just as he did not ask the dictator of the centralized ponzi for his comments on why at last count 50 people in Tunisia were dead protesting, among other, record food prices and cost of living.

From Market Watch:

Federal Reserve Board Chairman Ben Bernanke said Thursday that a
controversial $600 billion bond buying plan has contributed to a
stronger stock market. "Our policies have contributed to a stronger
stock market just as they did in March 2009 when we did the first
iteration of this program," Bernanke said at a Federal Deposit Insurance
Corp. forum on small businesses. "A stronger economy helps small
businesses more than larger businesses. Interest rates are higher but
that's mostly because the news is better. It has responded to a stronger
economy and better expectations." The $600 billion bond buying plan
follows a completed effort to buy $1.75 trillion in government bonds and
Fannie Mae and Freddie Mac-backed mortgage securities.

Obviously, none of this is news to anyone who realizes, as Zero Hedge readers have been told since 2009, that the Fed's one and only goal is to push stock prices higher in some fallacious linkage that the stock market is equivalent to the economy. But that's what happens when the person running the formerly free world is an academic historian with absolutely no real world experience.

And just to confirm this observation, we present Trim Tabs latest press release which states that the "Fed’s Quantitative Easing Works Wonders on Stock Market but Does Little for Economic Growth and Employment." Unfortunately it does a whole lot to make people all around the world cold, hungry, and increasingly angry and in increasingly more cases, dead:

Fed’s Quantitative Easing Works Wonders on Stock Market but Does Little for Economic Growth and Employment, According to TrimTabs Investment Research.

Economy Will Grow Slowly Until Structural Economic Problems Are Solved, and Market Participants Should Expect More Quantitative Easing in Second Half of 2011.

Sausalito, CA – January 13, 2011 – The Federal Reserve’s quantitative easing programs have helped stock market participants, financial institutions, and large companies but have done little to address the structural problems of the economy, according to TrimTabs Investment Research.

“Quantitative easing is supposed to produce stronger economic growth and lower unemployment,” said Madeline Schnapp, Director of Macroeconomic Research at TrimTabs.  “While QE1 and QE2 have worked wonders on the stock market, their impact on GDP and jobs has been anemic at best.”

In a research note TrimTabs details the negative impact of the economy’s structural problems, including a depressed housing market, enormous state and local government budget shortfalls, higher energy prices, consumers who have muchless to spend than in 2008, and huge federal budget deficits that leave theU.S. vulnerable to the generosity of foreign investors.  As a result, the economy has been stuck in slow growth mode despite QE1 and QE2.

“GDP increased a modest 2.7% in the third quarter of last year,” noted Schnapp.  “We need GDP growth of 3.0% to 3.5% to significantly reduce unemployment. In addition, employment gains averaged only 94,000 monthly in2010, much less than the 150,000 per month needed to absorb population growth, and consumers collectively have $1.1 trillion less to spend annually than in 2008.”

TrimTabs also highlights a correlation between quantitative easing and equities.  Under QE1 the Fed bought nearly $2 trillion in mortgage-backed securities, Treasuries, and agency debt between March 2009 and March 2010, a period in which the S&P 500 soared 67%.  Stock prices then sank 13% in the following five months, and now they are up 20% since Fed Chairman Bernanke announced QE2 at the end of August 2010.

When QE2 ends in June, the economy is in danger of returning to slow growth mode unless its structural problems are addressed,” predicted Schnapp.  “We expect the Fed to engage in more quantitative easing until investors are no longer willing to loan money to Uncle Sam at low rates.

h/t Eric and Mark Mansfield

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LawsofPhysics's picture

damn, damn, that finite planet and its finite infrastructure and finite resources!

hedge accordingly.

Sudden Debt's picture

You've clearly never heard of alternal dimensional worlds. According to that theory, every event creates one and creates alternal universes ALL CONTAINING ANOTHER EARTH!

If only we had a device to get there and rob them blind...

Arkadaba's picture

If only we had a device to get there ....

theXman's picture

Do we really need a Ph.D. in eCONomics to figure out that when you create trillions of dollars, prices of almost everything go up?

Id fight Gandhi's picture

Did he really say that making the stock market higher helps the economy and small businesses?

Spalding_Smailes's picture


Got Nvida, BankofAmerica, AIG ???

cougar_w's picture

Those are not the economy. Trading their stock does not create an economy, either.

JW n FL's picture

Yes... Beta... no Alpha.

JW n FL's picture

Yes... Beta... no Alpha.

jus_lite_reading's picture

I'm convinced that BEnron Shalom Israel Bernank is Satan. No other individual could lie and operate under false pretenses while causing the certain destruction of the entire global finance system. Hedge accordingly indeed.

Jason T's picture

Did he ever add he also studied Rudy Von Havenstein?  

cougar_w's picture

He did, and he found flaws in Von Havenstein's methods, which he is correcting for the ongoing model run. We'll get back to you once the experiment is over. If you are still around and still in condition to care.

velobabe's picture

his eyes are not that of a sly cougar, his eyes are of an Evil satan beast. they all have eyes of emptiness. these beasts are nothing less of a

satan wimp.

Confused's picture

Even better than that! 


"A stronger economy helps small businesses more than larger businesses."  


Does anyone really believe this guy?


shushup's picture

He keeps saying this in the hope that people will believe QE2 is responsible for the 78% rise in stocks so that as long as keeps doing QE people/traders/funds will keep buying stocks and he will look like a hero.

Let them all fail's picture

Who cares what he said, this is called propaganda, not an interview

banksterhater's picture

He comes right out and says he's watching the IWM everyday, basically! Mission Accomplished!

Id fight Gandhi's picture

And so qe3 will be needed so the stock market doesn't crash and people lose money and more jobs right? So it can never ever end.

cougar_w's picture

Flawless. Absolutely. Flawless.

You only gotta wonder why someone didn't come up with this sooner. It's like free money or something.

velobabe's picture

shelia B E A R is looking luscious, for a future hunt ress.

bonddude's picture

She didn't do her job for the "To small to protect/saves" like she did fot the "TBTFs."

interesting series

Arkadaba's picture

Like the picture of Geithner too  in this article - narrowed eyes, frown line while reading Jack and Jill went up the hill ....

knukles's picture

reading very slow due to speech impediment....
It's not nice to make fun of the handicapped.

NOTW777's picture

can we hear bens thoughts on food riots, soaring food prices, record food stamps, foreclosures and unemployment - what has QE2 done for those items

cougar_w's picture

Ben: "I would be happy to address those issues, except they are not happening anywhere in the world that I personally know of."

RobotTrader's picture

Wow, gold stocks are getting totally hammered into the bell.

Must be "pricing in" an end to QE pretty soon.

Poor General Jim really got busted over a boulder on that $1,650 prediction.

Id fight Gandhi's picture

No disrespct robo, but I'm in no mood for it today.

pat53's picture

There ain't gonna be no mo QE's. Enjoy this one cause thats all she wrote !!

mynhair's picture

What, no buy the dip?  Pick up any NEM yet?  It's holding....

AccreditedEYE's picture

Frosty Sack is working a little harder today to keep Harry's and Robo's retirment fund in the green by the bell today.

Spalding_Smailes's picture

If only he purchased nvida geez' that was an easy call. They make the graphic chips for all the handhelds and tablets now with the new microsoft deal. Booyaaaa


Gold and the miners have done nothing since oct 20th ( miners = blowtorched )

If only general jim purchased AIG, BAC, NVDA, MIPS, SPRD, in december ( i did ) after gold started trading sideways .... Lol' Maybe another year or two of sideways movement like 2008-2009.


Turd told me 24 hours ago gold was going over $ 1,400.00 soon ??? WTF

Sutton's picture

He loved it at 300, to be fair.

SheepDog-One's picture

Fuck you Robo and your stupid gold stocks!

jus_lite_reading's picture

That basturd should be tried for murder!

SpeakerFTD's picture

The guy is such an asshole.  I can't believe he is the most powerful man in the world.  

Id fight Gandhi's picture

I hope the people of this country take back what's theirs soon.

Politics is a joke, its like two teams playing ball. Cheer for one or the other, but in the end they fuck you over anyway.

whatz that smell's picture

...fallacious QE.... blowing another bubble!

lead salad's picture

I am Ben's raging printing press.....


Time to buy the Silver.  Plus stock up the food pantry and ammo chest.

bob_dabolina's picture


You worthless P.h.D. You are worthless. I don't want a high stock market, I want to fill up my SUV and pay $25 not $100. I want to buy a house for what its worth not some bullshit price (which is I haven't purchased thanks to you) which is why I haven't hired anyone because your enabling of the U.S government is going to cause my taxes going up, either on paper, or via inflation. Which is why you have done nothing but stymie this recovery and caused decades of pain to come.


andybev01's picture

+ a single malt to go please.

Arkadaba's picture

Single malt will go through the stratosphere on these commodity prices - and they have been ramping over the past few years.  Ding! Make a chart on prices on single malt over the past decade? Any takers?

andybev01's picture

+ a single malt to go please.

bb5's picture

you have a way of getting right to the point and driving it home! Well done.

Misean's picture

I think unemployment of young males under 25 is nigh unto 25%....

I'm gonna start explaining to everyone I meet that Ben B.S. Bernutty is responsible.

I'd like Benny Boy to have a sit down with some that have been made aware.