Dr. Alan Greenspan, former Chairman of the Federal Reserve Board, was a master at obfuscation. He could answer any question regarding monetary policy and interest rates and not say anything you could understand. Many observers thought he deliberately spoke in circles to avoid signaling his intentions. This probably was the case when he took office in August 1987, because that was the way the Fed operated in those days. Over the last several years, however, he took steps to make the Fed more transparent and tried to communicate his thinking more clearly without committing to any specific course of action. In over 18 years on the job, he was never blind-sided.

Now comes Dr. Ben Bernanke, the new Chairman of the Fed. He was expected to be a straight-shooter who spoke in no uncertain terms. Many observers, however, were concerned that he might be too candid and rock the financial markets unnecessarily. These fears were allayed somewhat after he handled himself well in each of three Congressional hearings and was praised for the clarity of his answers. Indeed, investors have been waiting for months for any sign that the Fed would stop raising interest rates soon, so the stock market rallied strongly on Thursday, April 27th when Dr. Bernanke told Congress that the Fed could "pause" it's tightening to assess the economic and inflation outlook. No one seemed to pay any attention, however, when he added that "a decision to take no action at a particular meeting does not preclude actions at subsequent meetings."

On Monday afternoon, May 1st, the market was in a modest rally when CNBC anchor, Ms. Maria Bartiromo, dropped her little bomb. She announced that Dr. Bernanke had told her at a White House dinner that investors and the media had misconstrued his testimony to Congress regarding a "pause" in interest rate hikes. She claimed that Bernanke said the market was wrong to think the Fed had turned dovish on inflation and that the Fed was done raising rates. Of course stock prices fell after that, and Dr. Bernanke's honeymoon was over.

Criticism of his Saturday evening indiscretion came from every side. Although I believe he is, in fact, a straight-shooter and everyone knows that he favors "inflation targeting" and has repeatedly said that economic and inflation data will determine his decisions, he has to learn to Never Trust A Pretty Face.