Clickbait: Bernanke Terrifies Stock Investors, Again

If you are a stock investor, you should be terrified. The most disconcerting words have been uttered by the one person capable of changing the whole dynamic. After spending so many years trying to recreate the magic of the ‘maestro’, Ben Bernanke in retirement is still at it. In an interview with Charles Schwab, the former Fed Chairman says not to worry:
Dr. Bernanke noted that corporate earnings have risen at the same time; he believes corporate earnings will continue to grow and ‘catch up’ to asset prices.
Obviously, given his track record, that is a chilling statement of contrarian purposes. Kidding aside, it is interesting that he of all people would feel comfortable enough in making such a claim. For one, that is exactly the market problem at the moment. It is priced for enormous growth, way out in front of actual earnings which for nearly three years now have failed $100 (for the S&P 500).
In order for EPS to ‘catch up’ will require the kind of growth you actually find in a recovery, at the very least a short burst of intense activity that creates all the follow-on effects that he once talked about igniting through QE. But that isn’t what he actually said in his interview. Like Janet Yellen, Bernanke sees only vague improvement, so unsure that he felt compelled to qualify it further.

This post was published at Examiner on April 26, 2017.