With Fed Chairman Ben Bernanke giving what may be his last testimony before the House Financial Services Committee, Congresspeople on both sides of the aisle poured their hearts out to Bernanke for his “service.” In this Bernanke love-fest, he was repeatedly thanked for saving the economy from an even worse fate than what has transpired so far. Irony abounded in the questions following the compliments, however. One second, Committee members are praising him for doing a good job and the next, they’re asking him to do something about the exceptionally high rate of unemployment. In the hearing, Bernanke didn’t reveal much new information… and apparently the new class of aides on Capitol Hill is a poor one, as the pre-written questions hardly challenged the Fed chairman. Much of the hearing was wasted with questions which allowed Bernanke to repeat his opinions about the negative effects of the sequester. Anybody who follows Fed policy closely already knows Bernanke’s response: he thinks it’s causing a drag on the economy. Aren’t you glad to hear some of our Congressional representatives waste question time with the most powerful monetary authority in the world to score a few cheap political points? Other members of Congress used this valuable time to inquire about the economic effects of the immigration bill. Sure, that’s an important topic, but it’s only peripherally related to the country’s interest rate policy. After hearing the over three hours of testimony, I could only identify two pieces of information that are relevant to an investor’s decision-making process. First, Bernanke gave us a much clearer picture of when he plans to taper. In the past, we’ve been told that interest rates will be pulled up when the unemployment rate is around 6.5% and inflation is near 2%. Now, we’re getting some metrics on tapering asset purchases as well. According to Bernanke, asset purchases could taper later this year, if inflation is around 2% and unemployment is around 7%. When interest rates rose in recent months, many investors speculated that tapering could come as early as September. But with the unemployment rate at 7.6%, there’s almost no way to meet Bernanke’s metric of 7% in that short period of time. So, if he does taper the Fed’s asset purchases, I would foresee it beginning near November or December—if at all this year. The market had become overly concerned, and as a result, Bernanke gave it some clarity. Here’s the contradictory part: Though Bernanke gave this guidance, he kept saying that there’s no set plan on policy. It can change with economic conditions and circumstances. The Fed will stay accommodative as long as it needs to. So on one hand, he’s giving precise numbers like 6.5% and 7% unemployment, and on the other hand, his message seems to be, “Don’t pay attention to those numbers too much. We’re just going to play it by ear.” Kind of confusing, in my opinion. Does the Fed want the market to pay attention to those metrics or not? The answer is probably somewhere in between. The Fed wants to set guidance, but doesn’t want the market to panic. While its intentions make sense, its statements are inherently contradictory in many ways. The other significant statement came after one Congressman decided not to waste his time to score political points. He asked a very simple but extremely important question about the recent rise in interest rates and what Fed was going to do about it. Bernanke responded by saying that it’s too early to tell. However, he said that his benchmark for evaluating whether the Fed needs to take action to lower interest rates again is the real estate market. For right now, real estate is still moving higher despite higher mortgage interest rates. However, if the real estate recovery falters, then the Fed will take action to push rates downward again. For investors, that means “watch real estate!,” because that’s what the Fed is watching. But it also tells us that the Fed is somewhat comfortable with the current rise in rates. If everything keeps moving smoothly, it’s not going to rock the boat and push rates back down. Some of the Fed’s announcements have lowered rates slightly, but we probably shouldn’t expect anything more than words in the short run. Again, not a whole lot from his statements this time around, but we do have two things to closely keep our eye on now—near 7% unemployment and faltering real estate prices—as two key trigger points.