We got nothing out of the Jackson Hole - except more promised that they are worried and are really carefully watching the situation and so on. Long US weekend coming, with Monday being a holiday. Take the time to relax, check these quick comments on the Fed and come back for my weekend posts.
Earlier on
MoreLiver’s:
31.8. Best of August most read pieces +
all my ’views’
Suomen kansan Varjelus ja suuri Ajattelija puhuu tänään. Kaikki kuulolle. Nerokkaita analyysejä, viiltävää logiikkaa ja aivot sumentavaa viisautta on tarjolla. Kello 10.05 Ykkösaamussa: Jyrki Katainen, Karpaattien Nero ja Ajatusten Tonava kertoo missä mennään. Olen tilannut kirkonkellot soimaan kello 10.00 neljäksi minuutiksi. Sen jälkeen valtakunnassa on minuutin hiljainen hetki, kunnes niskalenkittäjä über alles jakaa meille sulaa viisauttaan. Nöyrtykäämme Hänen edessään. - Aksuli
Roundups & Commentary
Markets – Between
The Hedges
Recap – Global
Macro Trading
Roundup – A
View From My Screens
Tyler’s European Summary – ZH
European
Stocks Explode Higher As Spanish Bonds Implode
Tyler’s US Summary – ZH
Gold
Soars To Near Six Month High As Silver Overtakes Stocks In 2012
Reference
Debt
crisis: live – The
Telegraph
The Euro
Crisis Blog – WSJ
FX Options
Analytics – Saxo
Bank
European
10yr Yields and Spreads – MTS indices
FED WATCH
Algos Set New Speed Reading Record: 4549 Words
In 20 Milliseconds –
ZH
In a mere 20 milliseconds, the world's
'traders' had managed to read Bernanke's 4549-word script, interpret it (as
bearish in this case - which apparently is wrong now?) and start to sell down
the major equity indices…trades were timestamped 'before' the bids and offers
were even seen in the data-feed.
Jackson Hole Speech –
PragCap
I’ve attached the entire Jackson Hole speech here by Ben Bernanke. It doesn’t appear to contain anything out of
the ordinary. Perhaps the Fed’s most
powerful tool at this point is just leaving the empty bazooka on the table
letting traders stare at with the worry that he’ll pick it up….
…Bernanke is not committing the Fed to a new
round of asset purchases at this juncture. He does sketch out the economic
challenges, but stops shy of advocating a particular response. Next week's US employment report is
still key.
Ben's J-Hole Speech: Goldman's Take – ZH
Fed Chairman Bernanke's Jackson Hole speech
makes the case for unconventional monetary easing--in particular, balance sheet
and communication policies--as an effective tool, even if the "hurdle is
higher" for the use of such policies. In a dovish conclusion, he notes the
poor state of the labor market as a "grave concern".
Bernanke Makes Case for Further Stimulus to
Help Jobless – BB
Bernanke says Fed ready to act but short on
specifics – Reuters
On net, Bernanke's speech leads me to believe
the odds of additional easing at the next FOMC meeting are somewhat higher (and
above 50%) than I had previously believed.
Bernanke: more action is needed, but no news on
how and when – Nordea
The bar for QE3 is fairly high, as there are
good reasons for the Fed to conserve its limited ammunition should things get
much worse. For now, QE3 seems most likely in case of policy errors in either
the Euro area or the US
Bernanke defends Fed policy - more easing ahead – Danske
Bank (pdf)
The Chairman’s downbeat comments on the labour
market lead us to maintain our view that the Fed will engage in a new round of
QE at the September meeting, although this remains a close call.
Bernanke manages to toss a bone to Wall Street
and Washington – MacroScope
/ Reuters
…both investors and politicians what they
wanted to hear – that “the stagnation of the labor market in particular is a
grave concern” – all while saying next to nothing new about where U.S. monetary
policy is actually headed.
Bernanke in the Hole – Krugman
/ NYT
Um, sit on our hands some more, and think very seriously about maybe, someday, doing something.
Um, sit on our hands some more, and think very seriously about maybe, someday, doing something.
Bernanke’s speech offered the market virtually
nothing to go on, even less, in fact than the very little the market was
expecting. Was there anything worth reacting to?
Today's Jackson Hole speech from Bernanke sustains the
Fed policy of maintaining the QE3 cliffhanger: make lots of vague promises but
don't mention the specifics.
Bernanke on the defensive – Felix
Salmon / Reuters
The overall tone here, then, is defensive:
Bernanke’s on the back foot, trying to justify past and future actions against
critics on all sides. And when an institution is in a defensive crouch, it’s
not going to do anything bold. The Fed was bold in 2008-9, at the height of the
financial crisis; those days are over now.
Parsing Ben Bernanke: More Fed action is on the
way – Wonkblog
/ WP
That’s vague, and probably purposefully so. But
coming after a long argument that quantitative easing has worked in recent
years, and a rejection of structural arguments that, if correct, mean that more
easing will be ineffective, it’s hard not to see it as an indication that more
aggressive Fed action is on the way.
Bernanke Signals Readiness to Do More – WSJ
A defiant Ben Bernanke sought to shoot down
criticism of the Federal Reserve's easy-money policies and strengthen the case
for new efforts by the central bank to bring down what he described as gravely
high unemployment.
ADDED LATER:
The Road to QE3 – Free
exchange / The Economist
ADDED LATER2:
What most outsiders can't appreciate about the
job of Fed chairman is that among his unwritten responsibilities is maintaining
the integrity and credibility of his institution for his successors. There are
two ways this can be lost: by doing too little in the face of either too high
unemployment or inflation; the other is by doing too much, with activism that
prompts a backlash against the institution that constrains its ability to act
again. If Mr Bernanke has calculated correctly, he has found a path between the
two.
The most
interesting stuff was not Bernanke’s speech.
ADDED LATER2:
Bernanke says the Fed can do more but… – Credit
Writedowns
I do think QE has very negative long-term side
effects in terms of capital allocation and private portfolio preferences that
are now all around us. William White recently pointed this out. Still, Bernanke
is in a damned if you do, damned if you don’t situation. Whatever he does or
doesn’t do, the Fed will be pilloried by leading economists who are at once
very divided on what the Fed should do and very vocal about their opinions.