Back in the ridiculous days of the late 90’s there was a product called split alert. This pager device would receive a message when a stock was splitting, which would then cause a pavlovian buy response on the part of the user. The premise was, at the time, that stocks splits were bullish because as we all know a pizza sliced into 24 slices instead of 12 is inherently worth more. We look back on all of the ridiculous behaviors and attitudes that existed during this time and we shake our head as to how this mentality was allowed to take hold. For some reason, I was thinking about split alert as I listened to Chairman Bernanke’s comments post FOMC. I wondered if we will look back years from now in amazement as to the gullibility of a market so fixated on monetary stimulus that it failed to see the flaws in thinking that a $15 Trillion Economy could be micro-managed using untested, unconventional and, to date, unsuccessful monetary policies. A question was asked during the Q&A about the recent backup in rates and Chairman Bernanke went to great lengths to explain that the market simply was misinterpreting the Fed’s intent. They did not understand that, while at some time their pace of asset purchases may slow, the stocks of assets that the Fed holds will remain unchanged. This, he stated, should be sufficient to hold down rates. We would suggest to the Chairman that bond market participants are not hard of hearing. What they are hearing quite clearly is a Central Bank intent on pursuing a policy of reflation/inflation and they are voting with their feet. Buy stuff, sell paper.