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Bernanke May Want to Hint At July Tapering Move Now: Scotiabank
Via Guy Haselmann of Scotiabank,
What Bernanke Might Want to Say
In past speeches, Bernanke has said that central banks should not surprise markets. However, he has also said that central banks should not threaten action, because the threat is then counter-productive to what they are trying to achieve under current policy. Therefore, waiting 2.25 months until the September meeting seems impractical to me and counter to earlier speeches.
Bernanke can use his speech today to bring clarity to the market, while limiting market damage. For the reasons mentioned, he may want to hint at an earlier-than-expected tapering (say at the July meeting rather than the September meeting). At the same time, he may want to emphasize asset purchases may continue for longer than expectations. Of course, he will also emphasize that tapering is merely a slowing of the rate of purchases (slower easing) and that a rate increase in a long way off. Trying to extend forward guidance at the same time that he moves forward the initial timing of tapering will help limit an adverse market reaction.
One reason the Treasury market priced in a Q4 2014 rate hike – moving the first hike forward by 6 months after the June FOMC – was because the FOMC central tendencies lowered the low end of its unemployment rate forecast for end-2014 to 6.5%, which is the Fed’s target for the first rate hike. Bernanke may wish to verbally lengthen this assessment.
Bernanke may wish to say something about the revised exit strategy guidance paper (from January) that is likely to be released at the July meeting. The original paper said that QE will likely end 6 months after the first taper and rates will be hiked 6 months after QE ends. Bernanke may wish to hint that both of these time frames are likely to be extended. In addition, the FOMC noticed (likely with angst) the rise in mortgage rates. Bernanke can use this opportunity to emphasize that no Fed mortgage assets will ever be sold (but rather allow to run-off). The first paper discussed asset sales, but Bernanke said at the June FOMC press conference that the Fed does not intend to sell any mortgages.
Background, Reasoning, and Justification
Bernanke gives a speech today in Boston beginning at 4:10 PM entitled “The First 100 Years of the Federal Reserve: The Policy Record, Lessons Learned, and Prospects for the Future”. There will be a post-speech ‘Question & Answer’ period. This is an ideal time for him to fine-tune the Fed’s complicated message to markets. He can use this opportunity to send up a trial balloon for next week’s semi-annual report to Congress. I suspect Bernanke could even have his staffers leak questions to ask to those in the audience in order to frame and direct the conversation.
I believe the Fed has drifted toward acceptance of tapering because of concerns about: 1) financial instability, 2) asset bubbles and 3) amassing difficulties for its exit strategies, not because economic nirvana has been reached. The FOMC likely recognizes that economic strength is not ideally where they would like it to be, but they understand that $85 of monthly asset purchases has a greater impact on asset prices than it does on lowering the Unemployment Rate (UR). Therefore, I believe the decision to taper at one of the next two meeting is almost a certainty. “Data dependency” will dictate the length and pace of QE, but will no longer delay the tapering start date past the next few months.
Bernanke can site “progress” as the reason for tapering. The UR has fallen from 8.2% to 7.6% and employment has expanded by over 200k jobs per month on average over the last 6 months. A tapering announcement would afford the FOMC the opportunity to get all members on the same, increase their flexibility going forward, and remove it as an uncertainty overhanging markets.
In addition, I reference a January 2013 FED paper that discusses the evolution of the Fed balance sheet. Exit strategy projections are in sections 3.2 and 3.3...
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Took late, Ben.
You can't slowly unpop a bubble, let alone the largest one, affecting more asset classes, than any prior one in history, that you inflated.
Ben S. Bernanke's 'Virtuous Circle'
But good luck, and sayonara, bitch.
Say Goodnight Irene...
Wasn't Irene the go word for the start of the mission in Black Hawk Down?
BernQE what about the GASOLINE? Our house prices bubbled high, you let us live there for free now! Food prices bubbled up, you give us foodstamps, gas prices are high so we get...
Give us more. MOAR. Get to work, Chairman.
who the fuck is listening to this zionist punk? what should be tapering is the knife blade of the butcher we hire to disembowel this reprobate...
This guy is putting garbage out because he, apparently, accepts the garbage in of government statistics.
Headline after headline about what the Fed, JPM, Goldman, Scotiabank..... think. Who the fuck cares? I mean, WTF? Who gives a shit what a crooked banker has to say? You know it's all lies anyway, so is this an exercise in trying to navigate lies? Or do some now start to actually believe what the banksters say is true?
Someone once said that "money is the root of all evil". That statement clearly shows what banks are about, if you believe the statement.
We sit in anticipation for the rollout of the Fed minutes, like it's some divine information which will make our lives more complete and will satisfy our daily needs. The truth is the statements coming out from EVERY banking institution is pure lies and rot.
I am fucking sick of banks. Fuck banks, and all the lies they distribute. End the Fed - now.
I am fucking sick of hearing the lies about 2% inflation, 4% unemployment, and 4% growth. ALL A PACK OF LIES. Anyone who pays attention on a daily basis and who actively participates in the current economy knows bloody well that we are hovering around 10% inflation, 20% unemployment, and 0% growth.
FUCK BANKS.
LIARS.
"Anyone who pays attention on a daily basis and who actively participates in the current economy knows bloody well that we are hovering around 10% inflation, 20% unemployment, and 0% growth."
+1000 (and a perfect example of why the author is dead wrong about most of it)
This is gibberish. Bottom line is that if the market is this dependent upon the dissected sentences from Ben, the markets are fully dysfunctional (like we didn't know that already). Yeah, I know it has been that way since Greenspan, but not at this level. Guy Haselmann might as well be suggesting what color tie Ben wears. The whole thing is ridiculous.
Therefore, we believe the decision to taper at one of the next two meeting is almost a certainty.
The WORDS taper may be mouthed(to blast the commodites,and market),but NO tapering can occur,or the interest rates go up on the Fed,no stopping it.QE till this biatch is upside down in the ditch.
Bernanke can site “progress” as the reason for tapering. The UR has fallen from 8.2% to 7.6% and employment has expanded by over 200k jobs per month on average over the last 6 months. A tapering announcement would afford the FOMC the opportunity to get all members on the same, increase their flexibility going forward, and remove it as an uncertainty overhanging markets.
Uhhuh,sounds good unless you know the REAL #'s. 23+%,U.6.Some DA's might go for these part time jobs replacing full time GOOD paying jobs, but we know better.
Perfect.
"...almost a certainty."
More gibberish. That's like almost pregnant -- we're working on it!
Almost a certainty means "possible" or "likely". No more, no less. Why not just say so.
The "analysis" has reached the same level as the Fed pronouncement itself. Do people put out this type of "analysis" just because something, anything, is expected of them? Give it up!
Here's the weird part: We are analyzing the analysts, and being no more articulate. Twilight Zone.
One of the next two! So even if its not the next one, the author is still in with a shot!
I believe in America. I believe a turd can be picked up by the clean end. I believe in my Uncle Walt waving his penis.
Yes.......I believe.
Exactly, there is no easy, painless way to unwind the excessive leverage in the Mortgage Reits, their investors, and the MBS market, are going to suffer no matter what.
Bring that shit on, bitchez!!!!
better end the fed before it will be here for another 100 years.
Q.Q
If that were true, markets would be a whole lot less orderly.
No way he does anything of the sort. He may bluff some more, act tough, but nobody's buying that after years (decades) of giving in to every little market tantrum and feeding them more money candy.
It's time to gather around Bernanke, Kuroda & Draghi, as if they were jugglers at a carnival (because they are), and openly mock them as they drop each and every egg they've tossed into the air.
Interesting too, the last two citations from ZH are from GMP and Scotia, both Canadian investment banks. I guess domestic Wall Street players can't even go that far in pointing out the emperor's nakedness. No money candy for you!
In the last 2+ years, S&P and DJIA are up 38 and 34% respectively. TSX is down 1.5% over the same period.
Resource-less Recovery!
Bingo. Any reprieve will be temporary at longest... More likely than not, there will be nothing but mere talk of taper, while plans are drawn for additional QE. They.cannot.stop.printing.
the bernank also said subprime is contained.
benny has to pony up for obamacare subsidies next year so no taper will be allowed.
Q: If the fed is the market how can it possibly surprise itself?
i'm just hoping he has that huge desk again while taking questions. ideally with reporters asking "what? huh? can you speak louder?" and my favorite "who ordered a triple cheeseburger hold the mayo?"
give me hamm on five hold the mayo
http://www.youtube.com/watch?v=TVdvyWK6NiI
Will Steve Liesman be sitting on his lap ala Edgar Bergen/Charlie McCarthy?
i think the tapering/ending qe TALK was directed as a prick at the stock market...but as usual the bluff was called and the bond market solf off----kinda reminds me of the irrational exuberence speech
now ben has to start the taper or enforce it full force to take some air out of equity assets
but once a bubble is pricked....all the air comes out
then the USA can do a japan
This guy may want to STFU
I'm more convinced than ever that when we see interest rates spike, there'll be an initial panic as real asset prices spike due to fear over the future debt cost with an eventual, sharp crash in asset prices as interest rates push people out from being able to afford the debt service itself. Talk about damned if you do, damned if you don't!
Pop it. Pop it now.
Or wait until September, entering the fall and historical crash time. That could set up for a lovely flush.
If I were he, I would pop it pronto.
And theres also a sizeable comet coming through later this year. Thats always ominous.
I hope the next FED Chairman can be more transparent and convoncing when he or she needs to lead the market to believe that the FED won't not not taper until it is clear that not tapering won't not cause any problems for the US economy.
Interestingly enough, it's not the Fed Head's job to "lead the market". Think about it.
Where have we gotten when that is the mindset? Even scarier, when that is the actuality?
There is a big arrow on this map that says, "YOU ARE HERE".
#losing
$106 headed to $107, and folks, tankers don't have to use the Suez Canal. This doesn't have to be about Egypt.
These prices are going to be a hand grenade in the teeth of Bernanke's plans.
which plan is getting the hand grenade?: his plans to make sure dimon gets his bonus or his plan to collect million dollar speaking fees after he retires?
Ben's memoirs, which he is writing as we speak, published within weeks after he leaves, will be some boring reading. There will be revealing quips and quotes (mostly not attributed) which will add a little spicy humor, of course. Those speaking fees will be about the same as ole Greenspan's I figger. Man, what a job. Eff up the economy and then get paid after the fact NOT to explain how or why. Where can I get a job like that?
We need a Fed whistle-blower to step forward before it's too late... Never mind, it's already too late. The evidence wouldn't even be good for future prosecutions since the rule of law left the country about the same time as the manufacturing jobs.
He will eventually get some help from Obummer on this when he threatens to release oil from the SPR. He will probably get some help from the CME too with margin rate increases.
The problem with that maneuver would be that it kills the speculator meme. If inadequate supply is truly the cause, then the SPR is relevant.
If the SPR were tapped, it is an admission of inadequate supply (not defined as inventories, defined as flow) and once he admits that, a lot of rationale falls apart -- not the least of which being that the SPR would not contain enough.
Thinking out loud here, but is Ben front running the crash with taper talk, hoping the FED saves enough face to be able to pick up QE when our citizens demand it? Would another crash not ease the oil (and gold) bootheel from our economic necks? (coinciding with China, et al, taking a dump)... thereby further solidifying the FED's role as saving the economy through QE/that QE really was effective after all? Do we need a crash to have enough political buy-in to quickly revalue our debts?
Mason Williams - Classical Gas - ORIGINAL STEREO VERSION
http://www.youtube.com/watch?v=HhMuCiAe6vA (3:03)
This is one of the most retarded pieces I've read. The fed shouldn't surprise markets so go ahead announce they are going to taper in July instead of September? What a fucking retarded douche. What does he think the markets will do if the Bernank comes out and says "surprise mother fuckers"? What an idiot.
Bernanke should just say that he has already been tapering if we want to use this logic.
"Surprise! Guess who was selling gold the last 6 months?" Big smile on his face!
All these guys are in the same shoes as Bernanke. They want to see what can their jawboning achieve. At this point in the game? Fuck all. Trust is gone, motherfuckers.
You mean our centrally planned economy may not be a fine tuned machine and Bernanke is not God? Who da thunk?
thy god is jehovah ben dovah
Why would anyone want to fuck things up during the summertime. When they can do it in the Fall.
"We have no idea what to do...but that won't stop us from doing it."
He may... or he may not.
Ben Bernanke on the weather forecast : tomorrow, there are big chances we'll have a clear blue sky, although some coulds might appear and rain, or even thunderstorms, are not to be ruled out completely. Don't forget to drink a lot and to equip your car with snow tyres.
Ben Bernanke on the future world cup winner : Brazil, Argentina or Germany are likely to win, despite the fact that the Netherlands, England or Portugal have the better odds to bring back the cup home. My bet ? Belgium.
Ben Bernanke giving the pancakes recipe : 3 eggs are mandatory for 6 cups of flour, although no egg is a viable option if you don't add sugar to the 5 cups of flour we mentioned before. Let the mix rest for 30 min before cooking, although doing it immediately gives better results.
Etc etc.
What a farce US markets have become. The only thing that matters is Fed policy. Everyone is wasting their time interpreting and reinterpreting the Fed's statement. It is beyond pathetic. All our markets are criminal, manipulated markets where insiders already know what the Fed will say.
Uh...taper my heroin? Gradually? I don't think so. I gotta gun
OBOWEL MOVEMENT Bankrolling Justice For Trayvon!!!!!!!!!!!
WooHoooooooooooooooo
he's finally focusing like a laser on jobs!!!!
Both parties are the same though, right guys!!!!
Here's an idea for the "future" of the Fed and the IRS.....ABOLISH THEM and hang everyone associated with them. THAT would be a bright future.
That's too conventional. First saw their heads off with dull steak knives--slowly, then hang them--by their balls; if no balls, by the nipples
Scotia is considered to be the main bankster still short gold against the heavy long US banks like JP Morgan. They will be squeezed badly if this call is what they really believe.
Latest Reports Confirm Gold Bullion Nanksters Positioned to Slaughter Speculators;
http://winteractionables.com/?p=4267
Sometimes - like today when I look at the state of my PM and miners investments - I wish I was short like Scotia. :-) Good for them!
Look at Kitco: Up, down, up, even as he speaks?
Where will it stop, red or black?
Place yer bets!
How about, 100 years and still running.........away with the wealth. How about, no prospect for a Federal Reserve future?!
Once for all, BB is always right. Funny that markets are so calm, algos are programed to "no volatility'.....and: heureka, it works! Who are the masters behind the keyboard? In deed, god's work.
a perfect doji day
"I believe the Fed has drifted toward acceptance of tapering because of concerns about: 1) financial instability, 2) asset bubbles and 3) amassing difficulties for its exit strategies, not because economic nirvana has been reached."
Those are the correct facts...but he will never say that....doing the right thing is not what the Fed is doing...he is just helping his buddies now....not the public
The exit strategy won't be determined by the fed. But maybe Scotia bank will have a seat at the video conference before we do bitchez.
The difference between stupidity and genius is that genius has its limits.
Einstein
benny's banker buddies have led him to this juncture.. i honestly don't know if they give a fuck as long as they get to front run every twisting squeeling move the fed makes..
Re: 200k jobs per month
You didn't read this, or you're a soulless shill for the MSM!
Exposing The Lie Behind The Nonfarm Payroll Numbers Today, courtesy of the monthly JOLTS survey
we got the confirmation we needed that, indeed, the official non-farm payroll number as per the Establishment Survey has been substantially off to the tune of a whopping 40% above what is quantitatively happening in reality. Job Openings and Labor Turnover Survey, if one looks at the data for all of 2013, one can see that JOLTS averages some 145,200 workers, while the Establishment Survey data shows average monthly gains of 201,833.
Or just about a 39% difference!
Source: http://www.zerohedge.com/news/2013-07-09/exposing-lie-behind-nonfarm-payroll-numbers
&&& Don't forget the quality of jobs posting!
Part-Time Jobs Surge, Full-Time Jobs Plunge By 240,000
so far in 2013, just 130K Full-Time Jobs have been added, offset by a whopping 557K Part-Time jobs. And there is your jobs "quality" leading to today's market euphoria. as we show month after month, the bulk of the jobs additions were concentrated in the lowest paying industries. http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2013/07/Jobs%20Industry.jpg
so....fed intervention will not end until unemployment is at 100%, right?
The Bernank will consider tapering to $84 / mth, becaus he is so responsible. Mkts will love his genius....Cramer will scream thta Bernank is a god.
buy,buy,buy... hey did you buy your feckin' cronuts yet? Hurry ! is the latest and greatest "thing"
Repeat after me: There is no voluntary exit from ZIRP
So start taper, then 6 months later QE is stopped cold turkey.
Anyone actually believe this bullshit? Without massive injections of QE daily we're back at good ol S&P 666 overnite, bonds blown to smithereens.....cats and dogs living together...
they say it's gonna be on CSPAN
http://www.c-span.org/Live-Video/C-SPAN2/
You guys watching this? His voice is cracking like Paulson's when Pauslon came before congress the first attempt save his own ass and steal $700B.
His voice is cracking! What are you afraid of Mr. Bernanke!
there is no voluntary exit from ZIRP
Tapering started as late as May and as early as january
Full stop is imminent if not already happened
That's a lot of effort to bring gold down further.
OT: Portugal to hold snap election June, 2014
As Master Yoda would say to the BernanQE: "Up Shut The Fuck You Must. Or Cut You, I Will...Bitch."
speaking now about gold
http://player.liquidcompass.net/WCSPFM
"Gold is a barbarous relic. I have directed the Fed to get rid of Gold and dump it in the Marianas Trench. With the US Dollar, Gold is no longer needed."
"The Dollar will be backed by the new GBF-Govt Bullshit Factor-which indicates a continuing strengthening of our monetary unit."
You guys watching this? His voice is cracking like Paulson's when Pauslon came before congress in the first attempt to save his own ass and steal $700B.
His voice is cracking! What are you afraid of Mr. Bernanke!
Just remember with Scotiabank, "You are richer than you think"
What they left out is that if you believe that, you are very, very stupid.
Fuck BernanQE! Looks like with all the talk of 2014, the Fed is trying to grease the mid-terms as well.
Too many people...not enough jobs...