Analysts' Kneejerk Response To Bernanke Speech: "No New Easing Hints"

Tyler Durden's picture

Less than an hour ago Zero Hedge was happy to point out the glaringly obvious.

Shortly thereafter, Bernanke confirmed it. Now it is Wall Street's turn to join in. From Reuters:


"Bernanke didn't reveal anything new in his prepared remarks. He was general and vague about what the Fed might do with monetary policy. He reiterated the Fed was willing to do more, if needed, but offered no clues as to whether additional support was needed at this time.

"Bernanke noted downside risks to the economy, but did not indicate whether the situation had deteriorated enough to warrant further action."


"The one thing we continue to hear is fiscal policy. It seems like the Fed is handing off the baton to the federal government in referring to the fiscal cliff which these tax cuts will expire at the end of the year. The Fed continues to hammer on the idea that we have done all we can and it's up to the politicians to do their part and not undo what we have done."

"The labor market faltered in March and April and further deteriorated in May. There doesn't seem to be any momentum in the labor market. Right now with inflation above the 2 percent mark, the Fed is probably going to wait and see before it acts."

"Their policy statement at their June meeting will likely be stronger in stating they will be ready to act if things worsen. I think there is a strong chance they will extend Operation Twist. We expect another round of quantitative easing is on the table."


"Here's the thing: he doesn't have a lot of options at this point. What can he say? He's there for accommodation if needed, but the data isn't bad enough to justify anything further at this point, and that includes the jobs number on Friday. I'm expecting more of the same."


"I don't think he is definitely saying that QE3 is on the way. He's saying what he has said before, reassuring people that they will act if things deteriorate further. In other words, they are there if needed but they don't feel they are needed yet."


"The headlines from Bernanke are fairly bland, with the meat of his discussion to come from the Q&A. People were maybe expecting something more explicit in his speech, but any details will come from the Q&A."


"He's cautiously optimistic, but saying there are still downside risks to the economy and capital markets. We're selling off because Bernanke didn't reiterate the earlier comments from Janet Yellen, which really takes QE3 off the table in the immediate term."


And here is Goldman: "No Surprises in Prepared Remarks"

BOTTOM LINE: Fed Chairman Bernanke notes “significant downside risks”, but no specifics on easing in prepared remarks.

1.    Fed Chairman Bernanke’s prepared remarks to the Joint Economic Committee offered few surprises. He characterized current growth as “moderate”—consistent with Vice Chair Yellen’s remarks last night as well as the FOMC’s latest post-meeting statement—and noted “significant downside risks to the outlook”. He said the European crisis in particular “has affected the U.S. economy by acting as a drag on our exports, weighing on business and consumer confidence, and pressuring U.S. financial markets and institutions”. He also discussed downside risks stemming from possible fiscal tightening next year.

2.    Unlike recent comments from Vice Chair Yellen and New York Fed President Dudley, Chairman Bernanke’s comments did not include a list of possible easing options. We do not read anything into this omission—and indeed he may mention options in the Q&A.

3.    One notable portion of his remarks related to recent labor market data. Bernanke said that some of the slowing “may have been exaggerated by issues related to seasonal adjustment and the unusually warm weather this past winter”. However, he also said that another interpretation could be that the deceleration may indicate that a “catch-up” period of strong job growth from excessive layoffs during the recession may be coming to an end—a theme he first highlighted in remarks in March. If this interpretation is correct, “more-rapid gains in economic activity will be required to achieve significant further improvement in labor market conditions”. His take on the latest labor market news therefore appears a bit more pessimistic than those from other Fed officials (e.g. views expressed by Presidents Pianalto and Bullard over the last week).

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Cognitive Dissonance's picture

Risk On.

Wait. Risk Off.

Then again, Risk On.

Does anyone know what they're doing here because I sure as hell don't................know what they're doing.

LetThemEatRand's picture

Out with the old, in with the new (banker in chief).

idea_hamster's picture

I don't think that's Bernanke's knee that the analysts are jerking....

BoNeSxxx's picture

he failed to mention the obviously coordinated pm smackdown planned for this morning...

The Big Ching-aso's picture



Ben has 3 options.   Print now, print later, and leave the country B4 it implodes.

CPL's picture

Where would he honestly run with his whole family that they would be safe?

Print is the only option left.  After that, the whole world is shown a new currency that is six decimal points off whole numbers.  Third world banana republic economics is how it's run now.

Bicycle Repairman's picture

If I were the FED and I wanted to help the TBTF banks, I wouldn't automatically inflate the markets, I would rock them back and forth while giving the TBTF banks advance notice.  The TBTF banks would then reap the assets of all other market "participants".  From time to time, however, a flat out inflation will be needed.  The TBTF banks would get advance notice of that, too.

disabledvet's picture

"more of the same" numb nuts. It's what WALL STREET is doing that deserves scrutiny. Since all analysts including the Tylers' Durden have foretold "QE" they are in fact "disappointed since not only did they not get the QE Gold price explosion yumminess" but even worse "sound money equities soldier on" pure phucking hell! Move along!

oak's picture

QE3 or not, depends on what Bernanke thinks Obama will be re-elected or not.

BeetleBailey's picture

Right with you Cog...I used to be a good trader - but mind reader? Never.

I was risk off when risk was on, and risk on when risk was off.

NEVER - in my 20+ years of trading and advising, have I seen these markets more verbally manipulated.

Me thinks LOTS of shenanigans going on (read: front-running) behind the scenes.

BeetleBailey's picture

Right with you Cog...I am totally flummoxed by this risk-on/risk suddenlt off market. My trading sucks as a result.

NEVER - in my 20+ years in this business have I seen the markets so verbally manipulated.

The Big Ching-aso's picture



Manipulating markets isn't easy when even the manipulators don't know what the phuck they're doing.

VonManstein's picture

ye tyler tweeted that.. but tyler also tweeted drama about possible global intervention at 9am..

basically, china has given them breathing room.. we'll see what happens.. dont underestimate these fuckers

EscapeKey's picture

No news is enormously bullish.

fuu's picture

No news had not been priced in yet.

EscapeKey's picture

As opposed to positive news (QE<n>), which has been priced in, two days in a row now.

Back to rumour pumping.

tjaxcity's picture

The news here is that Ben sleeps well at night... and LOL @ "trillion here a trillion there" 

tjaxcity's picture

Q&A session is providing the most info obviously

fuu's picture

Yeah the trillions here and there comment was sad.

Sudden Debt's picture

Bullish or not I just bought some MS and BAC puts today and sold off my silver calls.

these banks might go back to yesterdays lows and paper silver might now drop to 26$


SeverinSlade's picture

Entire Bernanke testimony translated into one statement:


Bernanke didn't once mention additional asset purchases.  He did, however, repeatedly mention shifting the Fed's holdings to further accomodate.  Meaning?  More Operation Twist...for a few months...and then?

ArrestBobRubin's picture

Gold and silver taken down, and on what? BS Bernanke BS and mumbo-jumbo. How original!

Totally expected; we know the script by heart. So do the Chinese!

Today is this week's Buy the Dip day. Don't miss it. The 12 month long Blue Light Special on physical silver is growing long in the tooth.

Starving Artist's picture

Yeah there couldn't have possibly been speculation premium in gold leading up to the speech.  You gold bugs crack me up.  You should be happy that your precioussss is so stable in value while the money supply moves around.  I thought you didn't care about fiat price?

ArrestBobRubin's picture

That's MISTER Goldbug to you son.  I can see how you're starving.

Boston's picture

Could it be that silver and gold are saying "no QE" ?????

ArrestBobRubin's picture

Of course. But by the same token and thinking: why is the DOW up? Was it not anticipating ctrl-p too?

Just look equally at both ends of the story. What you're saying means stocks should be down, just like PMs.

Yet the Dow is up, PMs are down hard. That's ok, we're in it for the long haul. All today means? Just more time to posess more Real Money in exchenge for Bernanke trash cash.

Al Huxley's picture

No, no.  the 'market' was very worried on Friday about the US jobs report being as bad as it was, causing the price of gold to spike suddenly.  But today's words out of an economist's mouth have resolved the employment issue in the US and therefore the 'market' no longer feels the need to own insurance against economic calamity, and has rushed to sell the insurance purchased Friday.  All hail the chairman for fixing the economy with his words today.

sbenard's picture


Who needs an economy? We have PRINTED prosperity now!

CrashisOptimistic's picture

Let's be very sure we understand this.

If there's no QE in June, there will be none before election day.  Past June is too close to the election to maintain the aura of Fed independence from politics.

He just took it off the table until past November.

SeverinSlade's picture

That's a very good point. 

Also lines up with the rest of his testiomy which seemed to suggest extending Op. Twist.

Extending Operation Twist by a few months would get us to November.  What comes after it is anyone's guess.  [/sarc]

CrashisOptimistic's picture

Twist has run its course.  Twist requires selling the short end and buying the long end.  No balance sheet expansion is involved so there is no new money.

And worse, his balance sheet is now showing scarcity of short dated paper.  He's out of twistable bullets.

SeverinSlade's picture

Well as ZH has routinely pointed out, they still have capacity to extend it a few months, even more so if they change the maturity of the short-dated securities they are selling.

Point to take home is that without QE3 LSAP, market will sell off.

The Big Ching-aso's picture



Ah.    But don't you see?  That's exactly why he just might still do it becuz no one is expecting him 2 B4 the elections.

Cursive's picture


Nothing is off the table, at least in the eyes of market participants.  The vast majority of market makers and market participants are "all in" for the Bernanke Guarantee, formerly the Greenspan Put.  It doesn't matter if he didn't explicitly say it.  Look at what GS wrote:

Unlike recent comments from Vice Chair Yellen and New York Fed President Dudley, Chairman Bernanke’s comments did not include a list of possible easing options. We do not read anything into this omission—and indeed he may mention options in the Q&A.

CrashisOptimistic's picture

I am a better analyst than GS.


mayhem_korner's picture



All the theatrics are to reinforce to the market that the Fed is standing at the ready.  As long as the lifeboats are evacuating Europe and sopping up USTs and equities, the Print button can stay mothballed.  (Unless they want to back-door finance the stalling of the Euro sovereign collapse...would they do that??? /sarc)

ArrestBobRubin's picture

good point. It begs the question if the rug wasn't pulled out on O'bama today via the Feds inaction in an "acceptable" timeframe.

But don't bet that was was unacceptable in the past will remain so going forward. Example: 30,00 drones overhead by 2015 or so.

QE3 or whatever cannot be ruled out just yet. Nevermind the trillions that have already been doled out in 2012 under other names like the interest rate swaps with the ECB.

Cursive's picture

This is not a new concept, in fact ZH spends at least 50% of its time making this very point, BUT ---


Stop and think how ridiculous our "free" markets are when everything rests on the utterances and actions of a central planning sociopath.  Forget the November presidential election.  It's phony.  We have a ruling plutocracy of bankers and their political administrators.

Starving Artist's picture

"everything" being the stock market?  You need to get out more

Cursive's picture

@Starving Artist

Who said stock market?  With the notable exception of Black Market bartering transactions, our entire economy is based on the supply and demand for Federal Reserve Notes.  You don't have to be a stock market operator to be affected by this totalitarian regime.  Try opting out.  Unless you are extremely mobile (and the problem is global anyway) the opt out is not readily available.

CrashisOptimistic's picture

No, you can't make that case.  The number one issue for any Fed Chairman is to maintain insulation from government control.  

He took QE off the table until after November's election day.  Months and months of no QE loom now.

Cursive's picture


Who is the slave and who is the master?  I'm not falling for the notion that the Fed must maintain its independence from the executive or legislative branches.  That is a ruse to make thoe who are ignorant of the Fed's power think that it must answer to Washington or the American people.  We've seen enough evidence of the opposite, e.g. 85% of the American people against the 2008 bailouts, but what happened?  The Fed can do whatever it wants whenever it wants.  I agree that there is a caveat - when the people take to the streets and forcefully demand to have our liberties back, Washington may change it's tune.

adr's picture

Mr. Market didn't like the speech, but the Dow is still up .75%. That is still a victory. Algos must be searching for key words and are a bit confused.

Once again Ben talks out of both sides of his mouth. He's just happy he halted the market slide with rumors once again.

mayhem_korner's picture



Judging by their disappointment, it seems the 'analysts' were expecting viagara and got a regular ol' blue tic tac.

SeverinSlade's picture

"We are currently borrowing around 1.5% and Greece can't borrow anything."

Yeah, because the Bank of Greece can't print Euros but the US can print dollars.

mayhem_korner's picture



Do we still call it "borrowing" when there is no intent or ability to repay?  Jus wunnerin...

SeverinSlade's picture

Well we do intend to repay...We will just repay in freshly printed digital 1s and 0s.  Nothing like paying off debt with counterfeit money.

mayhem_korner's picture



Ah yes - the Dr. Seuss theory of debt:

I will borrow enough to buy this house

I will repay you enough to buy this mouse

StackAttack's picture

The Fed's dual mandate:

  • Low Unemployment (for Wall St Execs)
  • Price stability (for the price of employing a Wall St Exec... constantly adjusted up for ShadowStats inflation, not BLS inflation, of course because they know that BLS number is BS, too)