9:00am (EST)

The bulls controlled much of Wednesday’s action before a late day fade gave the victory to the bears.  The market rallied to new highs after the Fed announced another round of quantitative easing (QE4) of $45 billion a month to replace Operation Twist which was considered QE3.5.  

The recently launched QE3 program that committed the Fed to buying $40 billion a month in mortgage-backed securities is still ongoing, raising the Fed’s monthly stimulus package to $85 billion a month, or more than $1 trillion a year.  The market cheered the news as the indexes tested new highs during Wall Street’s lunch break.

This left the rally in the hands of Big Ben who said the Fed would target a 0%-0.25% short-term interest rate as long as the unemployment rate remains above 6.5%.  This was a pretty big deal because it will be the first time interest rates will be tied to the unemployment rate but that is where the rally stopped dead in its tracks. 

The problem with a 6.5% unemployment rate is that it is not expected until mid-2015.  Maybe by then the zombies figure everyone will have given up looking for work which drops them out the labor force, thus lowering the unemployment rate.  Brilliant!  It may be a good magic trick for the public to hide the truth but we continue to remind our readers the real jobless rate is north of 15%.

The market saw right through Bernanke and folded like a cheap lawn chair.  The bears called his bluff when he stuttered and said the historical unemployment rate was south of 6% and where we need to be but that’s not realistic anytime soon.   

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