You will find below my favorite market analogy from 2011
Global Head of Fixed Income Strategy
Jefferies & Company, Inc.
January 28, 2011
Charlie Sheen's dealer and Ben Bernanke
It appears that yesterday in Beverly Hills, America’s favorite TV comedian over committed to a late night party session
involving the most traditional of vices. A suitcase full of “punch” was delivered to his door step and the festivities went
into overdrive. While our beloved actor looks to be OK after a 48 hour bender, his story provides a useful reminder of the
consequences of gorging oneself at the punchbowl. It was the Fed Chairman in 50s and 60s, William McChesney Martin,
who famously said “It is the job of the Federal Reserve to take away the punch bowl just as the party gets going”. But
that is NOT the mantra of our modern day Fed. Ben Bernanke, just like Charlie Sheen’s dealer has arrived on everyone’s
door step with suitcase full of “punch”. He is pushing “risk on” - so go ahead make some risky investments and push
your consumption higher. It’s right there for the taking! And Ben am not taking that punch bowl away for a good long
while. We have a lot of partying to do with unemployment at 9.4% and core PCE below 1%. This Fed Chairman will not
let this economy go cold turkey into the 1930s.
Ben’s remedy for America’s last visit to the intensive care unit in 2008 is – you guessed it – to get on the juice again!
Much like the rollercoaster life of Charlie Sheen, the American economy is about go into full scale party mode. Ending in
the hospital is a given, but that's a long way off. The permanent damage from these juice binges are stomach pains for
Charlie and inflation for America - of course using the juice has costs! But the alternative of rehab and cold turkey is
simply too painful for either Charlie or America! So put your party hat on and get ready to ride the rollercoaster! It's
going to get crazy!!! Good luck trading.
Boudin Chaud. Cous Cous Froide. Allons Tigres--Poussez Poussez Poussez
Assistant State Treasurer
Chief Investment Officer
State of Louisiana
Department of the Treasury
445 North Blvd, 7th Floor
Baton Rouge, LA 70802
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