Art Cashin On Chief Justice Bernanke's "Delay And Pray" Strategy

Tyler Durden's picture

A few weeks ago America had to go through the supreme political theater that was the SCOTUS' unprecedented and uber-political decision on Obamacare, which in attempting to overcome allegations of partisanship, only succeeded in reinforcing these even deeper. Now, with everyone expecting Bernanke to launch QE every time there is a 1% downtick in the Russell, our honorable Chairsatan is in the same position: he needs to do something but can not afford to appear political with the presidential election just over 3 months away. In other words, from the soap opera about the Supreme Court of the US, we now move to the one about the Supreme Federal Reserve of the US. And the trouble for those whose investment strategy is hope and prayer is that the Fed is becoming aware of this reflexive phenomenon, and just for that reason may delay QE until September, by which point the US, and global economy, will be in freefall.

From UBS Financial Services:

Is Bernanke About To Pull A “Justice Roberts”? - Traders are beginning to wonder if Fed Chairman Ben Bernanke is considering take a leaf from Justice John Roberts’ playbook.


You recall that lots of court watchers saw Roberts’ decision on Obamacare as a means to address two court problems. The first and most important was the growing concern that the Supreme Court’s reputation was under attack. Too many 5 to 4 decisions on key cases had raised charges that the court had become politicized.


The second problem (for Roberts) was how to approve the law without giving Congress new and sweeping powers over both individuals and commerce.


Roberts’ solution was to approve the law (breaking the presumed 5 to 4 bloc) but approve it on narrow grounds, calling the mandate a tax not a penalty.


Now Bernanke and the Fed are the objects of criticism. The institution is being openly challenged in Congress and elsewhere. A big part of the challenge is the effect of Fed actions on the election (recall Rick Perry’s comments on further easing).


So, traders wonder if he might try a Roberts-like solution. The economy needs help but how can they do it without the possibility  of influencing the election.


One possibility is delay.


If the Fed began a new program right now, its economic impact might begin to show up in the numbers in the weeks just before the vote.


That leads to speculation that the Fed might choose to drag its feet - to wait until September to implement a new program. That way the institution would be serving its mandate (helping the economy) without influencing the election.

It’s only speculation but, so far, the Fed doesn’t look to be in a rush. We’ll watch next week’s FOMC meeting for further signs.

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ZerOhead's picture


"Delay and pray" my ass. More like "Squint and print".

Don't forget $15T was injected into the system by Mr. Bernanke with no-one even knowing (or telling for that matter).  (Part 1)

disabledvet's picture

That does add some "street Cred" to whatever he does...if anything

Kitler's picture

About 15 trillion dollars worth.

The Big Ching-aso's picture




QE now, political. QE after election, non-political.  A politically balanced fiscally insane approach.

ArkansasAngie's picture

Who wants Ben to print?  Republicans?  Democrats?  


Neither a republican nor Democrat be


Printing is not the answer



metastar's picture

The issue here is that the SCOTUM is charged with upholding the Constitution while the FED is clearly an abomination of it.

Both are now at war with the American people.

Joe Sixpack's picture

Either way he influences the election. Delaying helps Romney. Starting now helps Obama. What he does can be interpreted in terms of his choice for president.


What he has done should help Paul, but the sheeple don't understand that.

imbrbing's picture

My SCrOTUM is charged with holdin up my balls, and it is at war with my underware now, in other words, its all in knots down there thinking

about all this crap.

Kitler's picture

Correct. Printing is not the answer.

But failure to print would be suicide.

ArkansasAngie's picture

Gee... suicide?  For whom?  The shadow banking casino?




Terrible things will happen?


Terrible things are happening now because they have.

Kitler's picture

Nothing really bad has happened yet.

Wait until global supply chains break down when the financial system seizes up. Hope you don't need food or meds.

blunderdog's picture

There are zero politicians in the USA who can come to grips with the idea of restructuring the big banks.

So responsibility to support them falls on the Fed: if Bernanke doesn't keep the big banks in business, the country will burn, FDIC or not.

Therefore Bernanke (and ANY Fed chairman) will continue manipulating the bond-rates and money supply until something changes politically OR the international financial system forces his hand. 

Although I'm sure all the politicians would prefer everything hang together until after the election, they're not going to be able to do anything about Bernanke's actions even if he does something CRAZY.

Kitler's picture

The big banks are the Fed.

blunderdog's picture

Not quite.  BofA, JP Morgan, etc, are "the big banks."  They may own the Fed, but there's still a legal distinction to be made.

exi1ed0ne's picture

"You tell me that if I take the deposits from the bank and annul its charter I shall ruin ten thousand families. That may be true, gentlemen, but that is your sin! Should I let you go on, you will ruin fifty thousand families, and that would be my sin!"

-Some dead guy

FRBNYrCROOKS's picture

Totally digging your avatar!!!!!

FRBNYrCROOKS's picture

I saw RP on C-Span today. Why can't he be as lucid during a debate? During debates he sounds like a stuttering anarcist but, on C-Span, today, he seemed very normal and makes me wonder if old Ron might have been higher in the polls if he would have taken a nice nap and popped a xanax before the debates?

I called my Congressman and told him to vote yes on HR 459 or I would be voting for the other guy come November.

HR 459 has 271 co-sponsors!!!!!!! Paul said, today, there was not a snowballs chance in hell it would get through the Senate if passed by the House.


Dr. Engali's picture

I agree. When he is speaking one on one or to a crowd he has an amazing way of breaking it down so the listener can understand. But when he has a one or two minutes to respond he tries to cram too much information in that little bit of time.

FRBNYrCROOKS's picture

I agree. You would think after, like, 50 years in the house RP would be used to public speaking by now? He knows he won't get even air time during the debates. I, suppose, I will watch the RP Convention on Oct 24th and the 'blican Convention to see all the douche bags make fools of themselves.

Temporalist's picture

I don't think it's a matter of anxeity that he doesn't seem as strong during debates it's about time and complexity. When he has time to speak about a topic without having to try to convince people in a 30 second snippet he gets the point across.

Blankenstein's picture

Hence the reason for the current debate structure.  The other candidates would fail miserably if they had to actually discuss economic policy and not just rattle off a canned phrase like "What we need is more job creation."  

Republi-Ken's picture


No QE is gonna happen.

Bernank keeps all powder dry until any Greek, then Spain, then Italy bank explosion.

He is the emergency parachute for a world bank collapse... that jumps off in Europe.

Then end Jan 2013 meeting, some decision after he knows politcal action has or has not voted re: fiscal cliff.

Got that Art?

You should stop all that third beer analysis Art.

Getting too weak brained buzzed conservative republican.

ReactionToClosedMinds's picture

your argument makes sense ... Bernacke feels he had done more than he wants .... so where is the 'political class'?  Team 44 had many opportunites to back the GOP into a corner.   Boehner gave him the rope to hang GOP  ...... but nothing.  Team 44 thought Tea Party would burn down GOP ... has not happened ... ranks have closed and been maintained ...

Which means Team 44 is either undeniably incompetent economically or corrupt (even being from Chicago, which most of this nation or the world overall does not understand fully & realistically how bad it is .... a 51-52% permanent voting coalition corrupt city-state, enough of a corrupt coalition to continually get re-elected, etc. --- pity the poor African American families trying to raise families there ...) ... but, to me, this would be shocking revelation if really were true to the scale it has to suggeest) or there is a 'surprise' lurking somehwere .. enough to transcend electoral concerns about the economy and increasingly capital markets.  The most cynical take is the latter ..... Team 44 figures they have some ultimate bail-out to invoke or will happen to save them.  But then maybe the two former dynamics are the real reason.  Shudder the thought for this once great country .....

ReactionToClosedMinds's picture

somewhat off topic re: Cashin but RP related ...... there are rumors that Romney would turn RP somewhat loose on Fed.  At least an audit ...

But my guesstimate ... based on what 'has not been said' (so far ... wait until post-GOP convention ....Team Rmoney cannot get into this without alienating too much fund raising potentially and giving Team 44 an opening to attack him, etc.) )  is that there will be an attempt to reform the Federal Reserve System.  Certainly to reign in the now overpowering influence of the NY Fed which arguably has been running the FRS overall since Robert Rubin days  (see Goldie et al ....Dimon is present troika head).

Any one running a business these days cannot help but notice that US economy in it's mess because of Wall Street versus Main Street economy.  If so, then reasonable 'diagnostic' thinking has to start at all levels of leadership ... unless one is uttterly corrupt   But then 'corruption' is it's own illusion as there will be no wealth creation without economic recovery & growth .... otherwise everyone's 'ship' is at risk of hitting whatever random iceberg increasingly floats into North Atlantic as Greenland ice sheet breaks apart.  This is pretty obvious to me at least.  The 1990s rules have got to change ... which means Wall Street gets put back into it's box

We'll see .. and here is hoping ... maybe I'm too optimistic

Lohn Jocke's picture

On your knees, Bitchez!

Nadaclue's picture

I hope The Fed waits as well, I'm not finished loading PM's yet.

HoofHearted's picture

If they delay, there will be a huge sucking sound...followed by someone gettig their nose cut off on the upswing when they do announce QE3/4/5. Then another flushing sound as everyone realizes just how screwed we are. PMs seem to be the one thing that should handle it all ok. There will be volatility, but most of us stackers are prepped for that...

spastic_colon's picture

is AAPL now considered a PM?  cuz today may be buy calls, their silence may speak volumes.  somehow they may magically crush earnings again, even in the face of crappy ISM everything.

mick68's picture

Matters not. A 10% pop in the market won't put people back to work, so do your QE nonsense, it just doesn't matter anymore.

bigdumbnugly's picture

anything new here that hasn't been rehashed already on zh and elsewhere ad nauseum?

ZeroAvatar's picture

No, but us 'ZeroHedgers' can rehash this stuff AD INFINITUM!

john_connor's picture

John Roberts embarrased himself with his opinion on ACA.  The SCOTUS has even less credibility following that decision.

The difference is that the Fed never had credibility to begin with.

Dr. Engali's picture

All I got from that decision was that everybody in the political arena has their price before they sell out instead of doing what is right.

DosZap's picture

John Roberts embarrased himself with his opinion on ACA.  The SCOTUS has even less credibility following that decision.

The difference is that the Fed never had credibility to begin



The mistake Roberts made(IMHO) was not interpretting the language of the Bill,as written.

Had it been strictly ruled on AS WRITTEN, it would have all come down.

When I write something, or say it, I do not want someone telling others WHAT I said.

Only I KNOW what I said and meant.

MANDATE,is not TAX.(it was not up to SCOTUS to rewrite the Bill,just rule as written.

HaroldWang's picture

Not one to ever be a conspiricy mined type but if AAPL misses or has lackluster earnings, SPX will fall hard tomorrow. Really hard. So wouldn't it make sene for the largest company in the country to have had a chat with TPTB about how to word a possible lackluster report? How better to "massage" the market than well-chosen words from the biggest market mover in existance?

john_connor's picture

not likely to miss managed earnings but keep eye on outlook moving forward

daily bread's picture

FOMC = FO-aming at the Mouth Committee

The mad dogs of the fed know they are going to meet the fate of all rabid animals.


warchopper's picture

Had the market been allowed to crash prior to any of this QE nonsense, we would not be in the position we are in now. 

mrktwtch2's picture

doesnt matter who wins ..when george orwell wrote 1984 in the 50's he just picked that year out of the air but the way things are going id say by 2020 or a little earlier...we will be living in a similar situation (if you havent read the it its only about 210 pgs and the similarities to what is happening today are astounding..)..its a shame thi sused to be such a wonderful counrty..

Nobody For President's picture

2020? What an optimist you are. I salute you.

blunderdog's picture

Actually, George flipped the last two digits of the year he was writing it in, if you want to be accurate...

Hype Alert's picture

It will be seen as political either way.  If it's early it helps the incumbent and if it's later it helps Romney.  I think if it is any time before the election (November), it will drive the market up and be a help to Obama and still not fix what's broken.

Dr. Engali's picture

If he waits until the elections to print he is going to have bigger issues trying  to catch the free fall. I personally don't think he will wait until the elections, he has too much riding on the "wealth affect" of rising markets. If they collapse his whole game plan will have been shattered. And by this one quote: " I keep a collection of all the op-eds written by people who doubted me"..tells me his arrogance will not let his plan his mind. In reality his plan failed long ago.

spastic_colon's picture

i think he is foreshadowing that he is out of a job next year, the election is already over.

graneros's picture

His appointment doesn't end until 2014.  Regardless of who wins we'll not see a new Fed Chairman until then. The Bernanck was first nominated by W and confirmed by the Senate in 2006 then renominated in 2009 by Obama and confirmed by the Senate in 2010.

graneros's picture

Correct on all points. Particularly "In reality his plan failed long ago."  Ben will continue QE one way or another. Just change the ridiculous names a bit.  Quantitative Easing, Twist, whatever are so mundane.  We really do need the term tweaked a bit so it can be shoved in the backdoor without the hoi poloi knowing what just entered. Something that sounds so great everyone will bend over and smile. I can't come up with anything witty or brilliant on the spot but I'm sure the great minds here at ZH can come up with a few good ones.  WB7 ???  Hell maybe WB7 already has and I've missed it.  Seems like something he'd do.

gaoptimize's picture

FAIR program = Fair Asset Investment Rebate program.  Making assett holders more or less whole on underwater investments made since date TBD.