FOMC Bernanke

• COMPREHENSIVE FINANCIAL REGULATION JUSTIFIED
• TREASURY BEST TO DEAL WITH NONBANK FAILURES
• FED TO KEEP REVIEWING LIQUIDITY MEASURES
• FED'S JOB ONE OF MOST CHALLENGING IN MEMORY
• CRISIS SOFTENING GROWTH AND RAISING JOBLESSNESS
• FINANCIAL STORM HAS NOT PASSED
• NOTES RATES RELATIVELY LOW AMID RISING INFLATION
• INFLATION OUTLOOK UNCERTAIN
• COMMODITY DROP, DOLLAR STABILITY IS ENCOURAGING
• TO ACT AS NEEDED FOR MEDIUM-TERM PRICE STABILITY
• COMMODITY AND DOLLAR TRENDS LIKELY TO SLOW INFLATION

Analysis: The US is in a long term corrective period where inflation is a problem but should subside, growth and employment should weaken, but rates are sufficiently low enough given the inflation threat. 

The Q and A time will be watched.

The market is being influenced closely by the stock market.  The crosses are also coming into play more with the EURJPY and the GBPJPY following stocks as well.  Volatility seems to be back in vogue. 

• SAYS FED MAY EXTEND WALL ST. LENDING ACCESS TO 2009
• FED WORKING WITH SEC, DEALERS ON CAPITAL, LIQUIDITY
• URGES TREASURY HAVE LEADING ROLE IN CLOSING FIRMS\
• SAYS LOANS TO PRIMARY DEALERS MAY WEAKEN DISCIPLINE
• CONGRESS MAY NEED TO BOOST INVESTMENT BANK OVERSIGHT
• SAYS SHORT-TERM FUNDING MARKETS IMPROVED SOMEWHAT
• ENDORSES PROPOSAL FOR DEALER LIQUIDATION PROCESS

Although Mr.Bernanke did not speak on interest rates or the economy, the health of Wall Street is certainly a concern of the markets.  Firms still need more capital to cover the tough times still ahead (e.g. Fannie Mae and Freddie Mac news from yesterday).  The proverbial pink elephant is still in the room (i.e.

For an analysis of the Bernanke comments and why it might be important for the dollar, please click on the following Attached File.

He is speaking about risk management in general. 

• FED MEAUSRES CONTRIBUTED TO SOME IMPROVEMENT
• FINANCIAL MARKET CONDITIONS FAR FROM NORMAL
• END EXTRAORDINARY STEPS WHEN MARKETS MORE NORMAL
• FED READY TO INCREASE TAF AUCTIONS AS WARRANTED
• FAILURE WOULD HAVE CREATED MUCH BROADER CRISIS
• TAKE SOME TIME TO ADDRESS FUNDAMENTAL STRAINS
• TERM LIBOR PREMIUMS ABNORMALLY HIGH
• REGULATORS REVIEWING LIQUIDITY RISK MANAGEMENT
• MORAL HAZARD BEST ADDRESSED THROUGH REGULATION

Comments do not address the economy directly in his speech.

• CREDIT MARKETS STILL UNDER CONSIDERABLE STRESS
• FURTHER HOMEBUIDING DROP IN COMING QUARTERS
• ECONOMY MAY CONTRACT SLIGHTLY IN FIRST HALF
• BEAR STEARNS TOLD FED IT WOULD FILE CHAPTER 11
• GROWTH PROSPECTS ABROAD DIMINISHED SOMEWHAT
• SOMEWHAT HIGHER UNEMPLOYMENT RATE
• FED MONITORING PRIMARY DEALERS WITH SEC
• LIKELY CONSEQUENCES OF A BEAR FAILURE SEVERE
• FAILURE WOULD HAVE SPURRED CHAOTIC CONDITIONS IN THE MARKETS
• INFLATION A CONCERN, EXPECTED TO MODERATE
• ECONOMY TO RETURN TO TREND GROWTH RATE IN 2009
• FED, FISCAL ACTIONS MAY SPUR GROWTH RETURN IN H2
• CREDIT CONDITIONS TIGHTENING.  CITES COMMERCIAL PAPER MARKET
• HOUSING IS A CONTINUED DRAGGED.