When I played high school football, our playbook was a hoot. Whether it was a kick-off return, a double reverse or a plunge up the middle of the line, every play was designed to produce a touchdown. I wondered why we needed a punter. In reality, we hardly ever made a touchdown. Something always happened to destroy our grand plans.

And so it is with the Federal Reserve Board. Their job is to maintain monetary stability and full employment - - a hopeless task if I've ever seen one. Yet, they never give up. Dr. Ben Bernanke, Chairman of the Federal Reserve Board, reported to Congress on Wednesday. He said that economic growth appeared to be slowing, (which could cost jobs), but it should gradually reduce inflation, (the primary enemy of monetary stability.) Stock investors took this statement to mean that the long awaited "pause" in raising interest rates was imminent. Stock prices soared. Dr. Bernanke also said "the U.S. economy appears to be in a period of transition," and the nation is set for "a sustainable non-inflationary expansion." Bingo, touchdown!

He basically described the Goldie Locks scenario in which everything is just right, neither too hot nor too cold. In VectorVest, we call this a Case 2 Bull Market Scenario, wherein earnings rise and inflation and interest trend lower. See VectorVest Views, 03/21/03 and 03/28/03. This scenario combines the best of all worlds for stock prices. Unfortunately, it doesn't happen very often. In particular, I can't ever remember it happening right after a Case 4 Bull Market Scenario like we are having now. Indeed, we are more likely to experience a Case 5 Bear Market Scenario, in which earnings are falling while inflation and interest rates are still rising.

In order to achieve his vision of the future Investment Climate, Dr. Bernanke will have to pilot this economy to a perfect, soft landing. This will be as easy to accomplish as it was for my high school football team to score a Touchdown.