Ben's Winning

Bernanke gave more testimony on Wednesday emphasizing and defending all
Fed policies. He successfully parried all questions about QE and ZIRP risks and
made no mention of any policy exit dates. Bulls translation, the printing press
will be on “auto” to infinity.

Interesting testimony tidbits were:

“Fed could go some time without sending profits to Treasury,” (Fed is
allowed to be a deadbeat).

“Savers will benefit with economic recovery; savers won't get strong returns
in a weak economy,” (So not in my lifetime?).

Not to be outdone, the ECB’s Draghi made equally curious comments:

“We do not act to help banks or governments,” (nose growing).

“Things are going much better in Germany than in rest of Eurozone,”
(duh!) .

“We see significantly lower than 2% inflation next year,” (when you make
up the data).

“Our monetary policy remains accommodative, and far from point where we
can have an exit in mind,” (you starting to see central bank joint talking
points yet?) 

“Pre-Crisis people were living in a ‘Fairy World’, thinking spreads
reflected reality,” (now they’re living in our “Fairy World”). 

Little mention was made regarding Italy even as Berlusconi patronizingly
stated:

“Italy needs to keep finances in order and needs to reform public institutions
to ensure political stability. (Stating the obvious clearly—he’s a reformer
dammit.)

Most of all this just confirmed to Bulls that all systems were “go” to
rally. Algos jumped squeezing whatever shorts were in existence since you can’t
fade these central bankers—at least not yet. It’s as if nothing negative happened
Monday as everything reversed course. Gold (GLD), the dollar (UUP) and bonds
(TLT) fell. Commodities (DBC) also plunged, as energy prices were weaker along
with precious metals. Stocks exploded, helped in part by better data from
Pending Home Sales (4.5% vs 3% exp. & prior revised up to -2% vs -4.3%) and
a mixed bag for Durable Goods Orders (-5.2% vs 4.6% and prior & ex-Transportation
1.9% vs prior 1%). If you’re interested, we did a brief video analysis of
homebuilder (ITB) [16] today.

Meanwhile, China stated it was searching for ways to promote stock
prices by allowing some state organizations, previously restricted from owning
stocks, to buy them. Eurozone Economic Confidence (this is before the Italian
vote) rose to 91 vs 89.5, which means the
confidence level was high but after the vote may not be so.

Headlines were screaming that “stocks were reaching all time highs,” which
while gains were impressive, we still have a ways to go for that—ask any dotcom
holder. Leading markets higher were transports (IYT) with just about all other
sectors following in line. Evidently bulls aren’t one bit intimidated by
sequester but remember that we’re also nearing month-end window dressing. Apple
(AAPL) disappointed shareholders at their meeting by not announcing anything
regarding their cash stash. Overseas markets weren’t as enthusiastic especially
in higher beta sectors.

Since it’s Wednesday, our colleague David Gillie wrote his usual brief
but targeted ETF Mid-Week Peek [17], which
should add to your assessment of conditions.

Volume was light overall as has been the routine on recent melt-up days.
Today’s volume in SPY was more than 100M shy of Monday’s sell-off. Breadth per
the WSJ was again quite positive.