Ba, Ba, Bernanke lulls sheep to sleep

For all the money they control, the investor class - and I use that term loosely - is not very bright. As an investor, you may find that statement offensive, but, if you've bought stocks over the past few weeks, well, then it does apply to you.

Sure the market has bounced back a little and today it was up sharply. But, pay attention and you'll get an inkling of why I think investors are more akin to sheep than wolves.

Fed chairman Ben Bernanke, speaking at an economic symposium at Jackson Hole, Wyoming, said that the Fed will "act as needed" to keep the credit crisis from harming the general economy.

Fine. Dandy. What did everyone expect him to say?

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"We at the Fed will not stand in the way of economic upheaval?" Or, "You idiots got yourself into this mess, so don't expect us to bail you out?" Actually, he did somewhat say the latter, suggesting that financial institutions and consumers who took bad risks in the sub-prime mortgage market - from both sides of the transaction - would not receive special treatment from the Fed.

And well they should not. These people made their beds, now they can sleep in them, whether they have four walls and a roof over their heads or not. If you parse Ben Bernanke carefully, he, much like his predecessor, Alan Greenspan, doesn't really say much. It's probably because they, like most artists of economics (remember, it's not science), don't really have any pat answers. They make it up as they go along.

So, those who cheered the Chairman's utterances today, are even more clueless than our wing-and-a-prayer Federal Reserve heads. Many take very little prodding to charge headlong into the maw of Wall Street, much like a sheep being led to shearing or slaughter. Baaaaaa!

Dow 13,357.74 +119.01; NASDAQ 2,596.36 +31.06; S&P 500 1,473.99 +16.35; NYSE Composite 9,596.98 +140.34

Today's advances exemplifies the current culture of wary wolves and unsuspecting sheep. The wolves sat back (looking more like bears), while the sheep followed the lead of both the Fed Chairman and the President (who believes anything he says?), who outlined plans to bail out people who stretched beyond their limits to get into homes during the boom.

It's actually laughable that the same president who sat back and did nothing while unregulated lenders were offering interest-only, no-down-payment loans to people who were poor credit risks in the first place. Trusting the Bush administration to help out the same people who were harmed by government's lack of oversight and regulation is like asking a fish to jump onto a hook. The result is the same: the fish gets snagged, scaled, grilled and eaten.

In any case, advancing issues were far ahead of decliners, by a whopping 4-1 margin. Volume, however, was once again anemic, so trusting this rally is for those with only the blindest of faith. New highs exceeded new lows, for the first time in over a month, narrowly, 123-107.

Most of the stocks moving were hoisted by the brokerages, after all, so Bear Stearns, Lehman, Merrill and their lot will be stuck with even more overpriced securities. Joke's on them. Ha Ha.

Oil priced 68 cents higher to close at $74.04 (Happy Labor Day). Gold was up $8.00 to $681.90, while a troy ounce of silver brought another 27 cents, at $12.23.

The markets and many businesses are closed on Monday, for Labor Day, a day in which many will be paid for taking a day off. Hey, it's the American Way, right?

Earnings, Politics Swing Markets

For the nest two weeks, market movements are likely to be a function of 2nd quarter earnings reports, though Tuesday may have been an exception.

Of the major reports flowing from corporate offices, the following:

• Forest Labs (FRX): Net income rose to $268.2 million, or 83 cents per share, in the fiscal first quarter ended June 30, from $200.6 million, or 62 cents per share, a year earlier. Analysts had expected 77 cents per share.


• Johnson & Johnson (JNJ): Net income, $3.1 billion, $1.05 a share, up from $2.8 billion, or 95 cents, earned in the second quarter last year. Analysts were calling for $1 a share.


• Merrill Lynch (MER): Net earnings rose to $2.14 billion, or $2.24 a diluted share, compared with $1.63 billion, or $1.63 a share, in the year-earlier period. Analysts sought 2.02 per share.


• Coca-Cola (KO): Profits, on a continuing operations basis, were $1.98 billion, or 85 cents a share, cleanly beating Wall Street's call of 82 cents a share.


• Wells Fargo & Company (WFC): Net revenue of $2.28 billion, or 67 cents per share for the 2nd quarter, compared with net income of $2.09 billion, or 61 cents per share, a year earlier. The numbers were in line with expectations of 0.67 per share.


• CSX Corporation (CSX): Reported earnings of $324 million, or 71 cents per share. Last year the company reported second quarter earnings of $390 million, or 83 cents per share which included a one-time 25 cent gain, so analysts were only looking for 64 cents and the company delivered handily.


• Intel Corporation (INTC): The company reported revenue of $8.7 billion and earnings per share of 22 cents in the second quarter including a tax item that boosted EPS by 3 cents. The resulting 19-cent-per-share profit figure was in line with analyst expectations.


• Yahoo, Inc. (YHOO): Net income for the second quarter fell to $161 million, or 11 cents per diluted share, from the year-earlier quarter's $164 million (0.11). Results were in line with lowered expectations of 11 cents per share.

Note that all of the companies listed above either beat or met expectations, but the overall market barely budged.

Dow 13,971.55 +20.57; NASDAQ 2,712.29 +14.96; S&P 500 1,549.37 -0.15; NYSE Composite 10,170.36 -17.82

Why? Could it be the price of crude oil, which hit a high of $75.35 earlier in the day before being hammered down to $74.02, a loss of 13 cents? Or the shifting political tides in Washington, which look to put Bush & Co. out of business in a matter of months? There's a storm brewing, and impeachment and military failure in the field (which has already occurred) are not likely to aid the mood on Wall Street.

Oil will slide to less than $60 per barrel if an end to the Iraq situation is found soon and it's looking more and more like that will be the case, but Wall Street isn't so sure, plus, the finality of the Bush administration may mean closer scrutiny of corporate governance and possibly even an SEC with real investigative and subpoena powers.

So, politics are moving the markets, even while corporate earnings are about as solid as one would like.

Decliners beat out advancing issues by an 11-9 margin and the gap narrowed again, with new highs checking in at 430 to 211 new lows.

On tap for tomorrow (company, ticker, expectations):

• CIT Group (CIT) 1.35


• eBay (EBAY) 0.32


• Gannett (GCI) 1.21


• Pfizer (PFE) 0.50


• Piper Jaffray (PJC) 0.74


• Southwest Airlines (LUV) 0.22


• United Technologies (UTX) 1.15

Gold and silver were both marginally lower. No surprise there.