The Bernanke’s
pre-written statement to the congress and his later Q&A session gave little
new information. The statement was very dovish, emphasizing that the monetary
policy will remain accommodative and asset purchase amounts can be varied both
up and down. EURUSD and stocks took this positively, but right from the
beginning of his actual Q&A sessions, Bernanke said the dirty word – TAPER.
That was it. EURUSD and the stock market sold off. Later the minutes from the
previous FOMC meeting (May-1) were published, and it was confirmed that some
members would prefer slowing down the asset purchase programs as early as June –
but the majority, Bernanke included, wants to wait for macro situation to
improve. So no news, but for some reason markets were sorely disappointed.
Previously on MoreLiver’s:
Roundups &
Commentary
News – Between
The Hedges
Markets – Between
The Hedges
Recap – Global
Macro Trading
The Closer – alphaville
/ FT
US: Stunned Stocks Slide On Soaring Volume; Worst Swing Day In 5 Weeks –
ZH
EUROPE
Can it be inflated away? – Buttonwood
/ The Economist
Marco Valli, the euro
zone economist of Unicredit, the Italian bank, has produced a very interesting
27-page note on the issue. To give the game away, the title is "Inflating
away the debt overhang? Not an option". Mr Valli argues that a central
bank trying to achieve this aim would face three challenges
Eurozone: The troika pulls its separate ways – Le
Monde / Presseurop
Hitched together at
the outset of the Greek crisis, the three-part team of the IMF, the ECB and the
European Commission did the heavy pulling in the bailouts of European countries
in crisis. Since then, though, strains among the three institutions have grown
more severe.
Despite the repeated
warnings of commentators too numerous to mention, Europeans have declined to
elect ultra-nationalist, anti-establishment majorities in their parliaments and
hasten a repeat of 1930s era fascism or communism. This does not mean that the
continent is without political problems as the next European elections
approach, however.
Research Euroland: Fact Book France – Danske
Bank (pdf)
Foreign Borrowing in the Euro Area Periphery:
The End Is Near – N.Y.
FED
Periphery countries
have suffered painful contractions weaning themselves from foreign borrowing.
The hope now is that the restoration of external balance in these countries
will set the stage for meaningful recoveries. The debt burden from past
borrowing remains, however, and argues for caution about the periphery outlook.
Much will depend on the behavior of external investors.
What Women Want: Merkel Scoring Points With
Female Voters – Spiegel
The German left used
to have a corner on the market when it came to progressive social issues. But
Chancellor Merkel has transformed the conservatives, attracting huge quantities
of women voters along the way. They've become a hot political commodity in this
year's upcoming election, with the opposition struggling to catch up.
Central Bank Watch: New Governors at the
Riksbank – Nordea
(pdf)
We regard both
candidates as skilled with judicious minds and integrity. Both will be voting
already in the upcoming July meeting, but we don’t see any need to alter our
repo rate forecast based on this. We still expect the Riksbank to stay on hold
in July, although recent soft data indeed makes it a very close call.
UK –
IMF
Britain's government
should spend more now to fund investment and steer its economy back to
recovery, the IMF said on Wednesday, a call unlikely to be heeded by finance
minister George Osborne.
Alongside suggesting
the U.K. government should slow its austerity drive,
the IMF on Wednesday offered Chancellor of the Exchequer George Osborne another
piece of advice: recapitalize your bailed-out banks.
UNITED STATES
US: The Ghost Of
Divergences Past Arrives – ZH
Four Reasons Housing Recovery Isn’t Yet
Boosting Economy – WSJ
FED
Analyzing Federal Reserve Asset Purchases: From
whom does the Fed buy? – FED
FED:
BERNANKE’S TESTIMONY
Chairman Ben S. Bernanke: The Economic Outlook – FED
Before the Joint
Economic Committee, U.S. Congress, Washington, D.C.
Bernanke offers no hint of pullback in Fed
stimulus – Reuters
The Fed’s monetary
stimulus is helping the U.S. economy recover but the central bank needs to
see further signs of traction before taking its foot off the gas, Fed Chairman
Ben Bernanke said on Wednesday.
The Fed Effect in One Chart – WSJ
Market Reacts As Bernanke Promises
"MOAR" – ZH
Euphoria Cracks As Ben Drops Hint Of Tapering
After All – ZH
Bernanke: no cuts to QE yet – Nordea
Despite recent
improvement in the job market, the Fed has still little appetite for a slowing
of the central bank’s bond purchases. Nevertheless, we still believe tapering
could start by the September FOMC meeting.
Fed Winddown Strategy Will Test Economy’s
Reaction and Adjust – WSJ
Federal Reserve
Chairman Ben Bernanke made clear Wednesday in testimony to the Joint Economic
Committee that the exit from the Fed’s $85 billion-a-month bond buying program
will be much different than past Fed exits.
Bernanke to Congress: Seriously, guys, what are
you doing? – Wonkblog
/ WP
You’re the reason the
economy isn’t taking off more. Of course, Bernanke is too polite to phrase
things quite so bluntly. But to anyone versed in Fedspeak, that’s the gist of
his message.
What *really* keeps the Fed up at night – MacroScope
/ Reuters
If the Fed fails to
adequately prepare investors for a policy change – however small it may be – it
runs the risk of undoing all the progress it has made lowering borrowing costs
for Americans.
Bernanke says no change for now – Econbrowser
When asked
specifically if purchases would be lowered before Labor Day (September 2),
Bernanke answered "I don't know."
Fed Winddown Strategy Will Test Economy’s
Reaction and Adjust – WSJ
Bernanke made clear
Wednesday in testimony to the Joint Economic Committee that the exit from the
Fed’s $85 billion-a-month bond buying program will be much different than past
Fed exits.
Is Congress the ‘enabler’ of a loose Fed? – MacroScope
/ Reuters
Goldman: "Our View Is That Tapering Is
Announced At The December FOMC Meeting" – ZH
Bernanke Says Premature Tightening Would
Endanger Recover – BB
Bernanke offers no hint of pullback in Fed
stimulus – Reuters
The Fed's monetary
stimulus is helping the economy recover but the central bank needs to see
further signs of traction before taking its foot off the gas, Fed Chairman Ben
Bernanke said .
Bernanke's Q&A testimony to congressional
panel – Reuters
Highlights of the
question and answer session of the testimony
Bernanke's leadership a critical factor for Fed
policy – CBS
MoneyWatch
FED:
FOMC MINUTES
"Hawks, Doves, Owls And Seagulls" -
Summarizing The Fed's Bird Nest
– ZH
An informative recap
of the current roster of FOMC members via Bank of America.
The Fed Minutes Freakout – Bespoke
What to Expect When You’re
Expecting Fed Minutes – WSJ
Parsing Fed Minutes: Debating When to Pull Back – WSJ
The Fed is heading
toward some difficult debates on when to pull back its bond buying program.
Exit Strategy Discussion – Calculated
Risk
Based on comments by
Bernanke today, and NY Fed President Dudley yesterday, it sounds likely the Fed
will allow the MBS to run off (a change from their previous thinking).
This Is What It Sounds Like When Doves Cry, And
When Others Start To See An Asset Bubble – ZH
Fed Minutes Pull Plug on Stock Rally – WSJ
Many on FOMC Said More Progress Needed Before
Slowing QE Pace – BB
The Fed Gives the Hot-Stock Boys a Lot to Think
About – WSJ
One key decision the
Fed made during the depression, and what is regarded as a key mistake by most,
was the decision in 1937-38 that it had done enough, that the depression was
over, and it was time to change course. They were wrong, and the depression
lasted for a few more painful years. Bernanke is well aware of this policy
mistake, and determined not to repeat it.
FOMC minutes to the April 30 / May 1 meeting – alphaville
/ FT
The reference to a
possible tapering of asset purchases “as early as the June meeting” along with
Bernanke’s comments on Wednesday will lead to speculation that the Fed is
preparing to scale back its LSAPs relatively soon, perhaps in the second half
of the year. But these sentiments can change quickly.
Flash Comment: FOMC - QE tapering is drawing
closer – Danske
Bank (pdf)
ASIA
Two Misunderstandings about Japanese Trade – Marc
to Market
First, the decline in
the yen does not automatically translate into lower prices for foreign
purchasers of Japanese goods. Second, Japan is not nearly as reliant on exports as many
suggest.
OTHER
A Keynesian Victory, but Austerity Stands Firm – NYT
Derivatives trader: 'Trading can take over your
life – but only if you let it'
– The
Guardian
OFF-TOPIC
Russian Spy Games: Ryan Fogle and the New Cold
War – The
Foreign Affairs
From wigs to dead
drops, the espionage tussles between the United States and Russia are increasingly playing by the old Cold War
rules -- including the public shaming of the unlucky spooks who get caught.
When We Held Kings – Grantland
The oral history of
the 2003 World Series of Poker, in which an amateur named Moneymaker turned $39
into $2.5 million and the poker boom was born
FINNISH
Eurokriisin hinta ja perustuslaki – Soininvaara
Pelastaako talouskasvukaan enää meitä? – Henri
Myllyniemi / Piksu
Yrittäjä ihmemaassa - asennevamman valtakunta – Jaakko Savolainen
Yrittäminen tässä
maassa on uskomaton diili. Sitä kantaa kaiken riskin, ei nauti sosiaaliturvaa
ja saa onnistuessaan vihan päälleen.
Museojohtajan
esteellisyys Guggenheim-hankkeessa – Jyrki
Virolainen