February 9th, 2012 Market Commentary

While policy makers continue talks about a final bailout to the Greek debt crisis, Wall Street marches on. The Street has learned how meaningless deadlines are and the market is discounting Greece and is instead focused on Federal Reserve Chairman Ben Bernanke’s recent comments. Despite higher than expected jobs numbers Bernanke is holding interest rates at record lows until at least late 2014. In remarks made before the Senate Budget Committee Tuesday, Bernanke said that current employment data may not reflect the total jobs picture – such as workers forced to take part time jobs because they could not find full time work or those that had exited the workforce.  Thus it seems that he will not change his mind on low rates despite contrary market data.

Therefore, with the expectations of a continuous low rate environment and with the likelihood that Greece’s bailout will be settled shortly, investors are seeking yield by adding riskier assets to their portfolios.  This should have multiple positive effects. Not only will it result in stocks continuing their upward trajectory, but it could also influence the investment decisions of business leaders. Rather than continuing to receive little to no return due to the low interest rate environment, CEOs might gain more confidence to use the excess cash on their balance sheets for accretive acquisitions.


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