#1 - Lost At The Wheel
Ben Bernanke is scheduled to speak at 10am on Thursday about the “near-term outlook for the U.S. economy”. The speech follows criticism from Paul Volker who suggested the Fed is not in control. Can you trade it?
Mike Darda, Chief Economist at MKM Partners, joins the panel for this conversation. Following is a summary of his main points.
-- Bernanke's speech Thursday (to be streamed live on CNBC.com) will likely mirror his speech last week in which he suggested that the Fed has taken down expectations for growth and noted more important threats to economy. Overall Darda thinks the Fed is more likely to lower rates
--Darda predicts Bernanke will not move before the meeting. However at the meeting he anticipates aggressive further easing; possibly a 50 bps rate cut on Jan. 30 and it could be 75 bps.
-- A rate cut should be bullish for emerging markets, Darda says, as well equities in the energy, materials, industrials, technology, and financial sectors
-- Darda feels the market is close to the end of this weakness. Since the valuations on stocks relative to bonds are lower than we've seen them going back to the 1970's -- it could pay to be a bull, he concludes.