In this latest note David Rosenberg is declaring the Greenspan and Bernanke Put dead:
“It should not be lost on anybody that every other time in the past when the equity market sagged as much as it has in the past few months – down almost 20% peak-to-trough – the Fed could always be relied upon to cut interest rates and hold everybody’s hand in the process. The Fed now has no such cannon, nor does it even have a pistol – we are down to unconventional firecrackers. And even with these, the Fed has been doing little more than alter the wording in its press statement.
The Greenspan & Bernanke Put: R.I.P. “
Hmmm. Perhaps a temporary death? Monetary policy is notoriously ineffective during a balance sheet recession. Perhaps when we finally remove Bernanke from the Fed we will be out of the balance sheet recession and we can resurrect the Put under the name of a new Fed chief? That will be exciting.
Source: Gluskin Sheff
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.