Ben Bernanke delivers a gloomy outlook

Fed says inflation `has picked up’
Fed says housing `continues to be depressed’
Fed cites supply chain disruptions from japan quake
Fed says slower pace of recovery `likely to be temporary’
Fed says labor market `weaker than anticipated’
Fed says economy recovers `somewhat more slowly’ than expected
Fed says u.s. economic recovery `continuing at a moderate pace’
FOMC vote is unanimous
Fed to end $600 billion treasury purchase program as scheduled
Fed sees benchmark rate `exceptionally low’ for extended period
Fed says unemployment rate `to resume its gradual decline’
Fed says pace of recovery `to pick up over coming quarters’
Fed leaves federal funds rate target at zero to 0.25 percent
Fed says unemployment rate `remains elevated’
Fed says inflation expectations have remained stable

Looks like stronger language on the form of future easy money will come at a later date. Gross at Pimco says the Jackson Hole, WY gathering in August may be the place. Nothing dazzling here folks, move along.

The Japanese supply chain comments are of note. This newsletter has postulated for quite some time that what has happened in Japan will have a negative impact on the US economy. This is why I am especially skeptical about "temporary" or "transitory" comments used to describe current economic weakness. For now I am sticking to my outlook for 0 to negative GDP in Q3 (measured via shadowstats data not gov’t pretend data). The Japan saga is not going away.

The chop will continue in stocks. Right now we’re in the midst of an obligatory rebound. The full on rally won’t come until rate cap strategy comes into focus from the Fed. Coming election year timing is in play. The interim will be prove to filled with plenty of twists and turns. The summer amusement park vacation!

Click HERE to sign up for my free newsletter about the latest market trends.