Stocks weakened modestly going into the close. The dollar has rallied, and for a not surprising reason: the Fed is silent on any new stimulus, so traders are less inclined to short the dollar and go long commodities and commodity stocks.
Has Mr. Bernanke implied some stimulus was coming? The short answer is no, but some traders seem to be trying to make something out of Mr. Bernanke's answer to a hypothetical question.
Mr. Bernanke was asked why the Fed won't consider taking action to stimulate growth, and then was asked what his preference would be to stimulate that growth.
This is a classic leading question. Mr. Bernanke said the situation today was different than last fall, when deflation and rising unemployment was a risk. As for what they might do to stimulate growth, Mr. Bernanke said the Fed could:
1) do more securities purchases (and structure them in a different way);
2) cut the interest on excess reserves that they pay to banks;
3) provide a fixed date to define the term "extended period."
But these were all hypotheticals, Bernanke did not intend to outline some new Fed strategy. When asked specifically when the Fed might raise rates, Mr. Bernanke said: "We're at least two or three meetings away from taking any further action, and I emphasize 'at least.'"
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