Many have criticised the Federal Reserve for its presence as a big player in the financial markets.The Fed, which serves help the economy, is now widely considered to be a financial market manipulator.
As such, many traders and investors no longer react to the fundamentals of the economy. Rather, they just wait and see what the Fed will do next.
David Rosenberg writes about it in his latest note:
This is how pathetic the situation has become, and we have Federal Reserve asset price manipulation to blame for it. This is what an acclaimed U.S.-based CIO had to state for the record yesterday:
Everybody at this point is much more fixated at what Chairman Bernanke says on Friday in terms of setting monetary policy … what we’re looking for is the Fed giving us some short of cue in terms of their next step.
Who cares about earnings or the quality of earnings?
It’s all about how the Fed, and ECB, can continue to jawbone investors into believing that central bankers have the tools pave the roads of the future into riches. So long as central bankers have the tools to pave the roads of the future into riches. So long as central bankers can maintain this aura that they have all the answers – like the Wizard of Oz behind the curtains! – the markets will continue to behave in.
According to MarketWatch, that quote comes from Jim Baird, chief investment strategist for Plante Moran Financial Advisors.