Art Cashin On The Fed, The Election, And The Collapse Of The Euro

Tyler Durden's picture

The other Chairman (of the fermentation committee) provides his unique color on the market's ability to shrug off the terrible news of the last few days thanks to the lesser-Chairman (of the Fed's) commitment to 'catch us if we fall' which has extended this rally for its fourth day-in-a-row so far. Critically UBS' Art Cashin opines on the tension between an entirely independent Fed and the pending election and the somewhat shocking statements from European Parliamentary President Schulz on the possible collapse of the European Union.


Bernanke Bounty Benefits Again - Chairman Bernanke’s commitment to “catch us if we fall” allowed markets to brush by several negatives and extend Wednesday’s rally into Thursday’s close. Thursday morning’s negatives were not insignificant.

A fairly upbeat earnings season ran into several big potholes. Exxon-Mobil missed most estimates. UPS, the exemplar of global business shipping came up short. Did that suggest a general slowdown?

Then Initial Claims hit, and hit hard. Once again they were over 380,000. That was the third week in a row and once again there was an upward revision. The four week (monthly?) moving average is at its highest level since the year began. The importance of claims is often lost in the media. A rise in claims is often mispresented as a slowdown in hiring. It is, instead, a pick-up in firing. It’s tougher to wrap warm weather around that.

As stunning as the claims data was to traders and economists, the markets seemed to shrug it off, just as they had dome with the negative earnings surprises.

The shrugging did not stop there. Over in Europe, Spain was put back on the rack. Most days that would have started a flight to safety in the dollar, sending stocks in the U.S. lower. Not Thursday, however.

The Fed And The Election - We had hoped to explore some of the problems facing the Fed in an election year. Perhaps next week when we can do it in proper detail. For today, let’s do a Readers Digest summary.

There are four more FOMC meetings before the Presidential election. Mr. Bernanke feels the recovery is vulnerable and says he stands ready to intervene again. If that intervention were to come coincident with some poll swings, the Fed might be charged with being political and/or partisan.

To avoid that, the Fed might revert to a pre-announced mechanical “trigger” for intervention. If they turned the decision over to an algorithm or something like the Taylor rule, they could avoid the partisan charge.

They have several options for a possible trigger. We’ll try to get to them next week.

A Still Restive Europe - The President of the European Parliament caused a bit of a stir yesterday when he talked of the possible collapse of the European Union. Here is one of several reports, this one from Stratfor.

European Parliament President Martin Schulz said Thursday that the collapse of the European Union is a realistic scenario. According to Schulz, a disturbing trend toward "re-nationalization" and "summitization" has taken hold in the last few months, with heads of state and governments "arrogating more and more decisions to themselves, debating and taking decisions behind closed doors and in disregard of the community method."Schulz also characterized the Fiscal Compact as an attempt to bypass the Commission and Parliament in forging a fiscal union. Meanwhile, European Council President Herman Van Rompuy said in a speech in Romania that the "winds of populism" are threatening the open borders of Europe.

Stratfor goes on to strike an analogy that doesn’t fully fit (as they note):

National political leaders are bypassing the European Parliament and Commission for two reasons. First, because their positions depend on national political processes. Europe tried to combine national sovereignty with supranationalism. In practice, that means national electorates determine who governs and national governments are answerable to that electorate. The United States also began with an ambiguity concerning whether the federal or state governments were sovereign. The southern states seceded based on their understanding that sovereignty rested with the states. Only after a brutal civil war was the federal government affirmed as the ultimate seat of sovereignty.


This leads to the second problem. In the United States, plenty were prepared to fight and die to uphold either national or state sovereignty. For both sides there was a moral principle involved concerning the nature of the United States. Europe has a long history of citizens fighting and dying for the sovereignty of nations, but who is prepared to fight and die for the European Parliament or the European Commission?

Nevertheless, the struggle will continue - without the bullets, we trust.

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PaperBear's picture

"Only after a brutal civil war was the federal government affirmed as the ultimate seat of sovereignty."

No, the people are sovereign, individually.

Non Passaran's picture

Who cares, there's nothing you can do about it.
Most likely it's nothing, as otherwise it'd be on CNN every day.

HarryM's picture

With the current trend of bullshit , I'm actually surprised the Dow isn't at 15k -

It's all make believe anyway - I mean why not?

"Just Do It!!!"--- Nike


Manthong's picture

“arrogating more and more decisions to themselves, debating and taking decisions behind closed doors and in disregard of the community method”

Those damn insolent arrogators arrogating arrogantly.

If you have a butthole, it is your obligation to offer it to the community for disposition.

smb12321's picture

I really can't understand all the wailing and gnashing over the DOW.  It rises and falls based on both sentiment and results - it always has and always will.   Nothing was as ludicrous as the dot com boom in which tens of thousands were made daily (I was one) only to be given back when the bottom fell out as reality set in. 

Don't try to fight the market no matter how illogical its rise seems in the light of so much economic calamity.  Invest along with 1-2% for protective puts.   Ride it up then get out on the way down.

q99x2's picture

Real News is too valuable for CNN to cover. They only sell news that nobody else wants.

blunderdog's picture

Not even to say he's wrong, but I'm totally amazed that anyone can watch Lyndon LaRouche speak without concluding that he's completely batshit-crazy.

doggings's picture


Fukushima Is Falling Apart


lol @ people making websites who cant spell Israel or Palestine in the navigation

slaughterer's picture

The way his voice shakes when he speaks, the Bernanke is a typical academic who never visited the gym in his life: do you think he will really be able to catch"the market" in his shaking hands when it falls?  I would have more confidence in the Bernanke if he worked out at Bally with a personal trainer.  

WALLST8MY8BALL's picture

I can already imagine the Banzai Picture - Barbells - A QE2 Tummy twister - ManBernKrug in a sweat shirt - Timmy Spotting him - A Rehypification Energy Drink etc....

Melin's picture

That's what they told us from the cradle on anyway.

SheepDog-One's picture

Bernank will 'catch us'....and then what? Put us in a gimp suit and lock us in a trunk? So stupid....I cant believe Im part of a species that suspends all reality because of what ONE guy says.

Temporalist's picture

"Catch us if we fall" sounds like a bunch of banksters will be climbing out on the ledge sooner or later.

slaughterer's picture

When Bernanke walks into the room, the reality scrambler is always set to stun.  

DeadFred's picture

That one guy has had the ability to severely bloody the nose of anyone in the market who has fought him (so far). As with a thuggish dictator there are many who despise him and what he's doing but are afraid to bet against him. He really isn't able to rally people for a recovery but he can badly hurt the bears. May he quickly go to the end that awaits him.

LawsofPhysics's picture

Everyone (especially the corporations and wealthy) wants a guarranty that they won't lose their billions, should they make poor decisions.  FAIL  Welcome to the new era of "robber barons".  The socialization of PRIVATE losses, and the capital as well as resource mis-allocation/mal-investment continues - FAIL.

Is anyone willing to have an adult converstion yet?  Obviously not.  hedge accordingly.

Winston Churchill's picture

I'm beginning to think hom sapiens have hit a self inflicted

evolutionary dead end.We have abolished natural selection

both in humans, and corporations.

Nature always wins.

AnAnonymous's picture

It fails for whom?

Because when one socializes the losses and privatized the gains, an unproper formulation to say the least, well, in the end, it grooves for the private side and it sucks for the socialized side.

And when that happens, it spells success for the one who want to shift the negative consequences of one's actions onto a third party while keeping the good consequences.

Success. Not failure. Success. US citizen style.

AnAnomalous's picture

Indeed comrade!

Grooving gains is not for privates ever, all grooving must be done in name and for benefit of Central Committee and Party, who are all-encompassing and powerful all.

Success, Chinese style, must flowing into all to Communist Party. 

Party is all. Individuals are nothing.

PaperBear's picture

"prepared to fight and die for the European Parliament or the European Commission?"

A deafening silence.

Non Passaran's picture

Shiiit, millions are getting ready to die fighting AGAINST those fucks

Corn1945's picture

When is the last time economic data has actually meant anything?

At some point, you start losing a lot of credibility when you expect economic data to matter to the market.

I've been watching this charade for 3+ years now and I honestly can't remember a single incident where negative data had any impact. 

We've got trillions in freshly printed money sloshing around combined with a rising share of HFT.

Art Cashi is an old dinosaur who just doesn't "get it."

LawsofPhysics's picture

I'd say he "got it", has a pretty good lifestyle and large trust funds for his children, built on the backs of people who are productive and created the real value while these same people's children can't afford shit.  That is the point, he wants to keep "getting it".

GeneMarchbanks's picture

'This leads to the second problem. In the United States, plenty were prepared to fight and die to uphold either national or state sovereignty. For both sides there was a moral principle involved concerning the nature of the United States. Europe has a long history of citizens fighting and dying for the sovereignty of nations, but who is prepared to fight and die for the European Parliament or the European Commission?'

Cartoonish. Fight and die? My word. Apparently the disconnect with reality is now complete since no one is fighting anything and enshrining something in symbol is just as mistaken as standing for a cause.


eckart's picture

Strafor are idiots. It'll be Euroland that will emerge at the expense of the UK and US while sidelining the EU. Buy EUR!

Non Passaran's picture

Sorry to disappoint ya, I put all my remaining US$ savings into silver (2 days ago) and gold (three weeks ago). See ya at $2K/Oz.

Hedgetard55's picture

Is that for silver or for gold?

smb12321's picture

As an investor all I can say is that I hope it is money you can spare.  The manipulation of both markets is as blatant as can be and when either soars, margin calls are sent out (after buying puts, of course) that send the price crashing.   I'm in for the long run but many cannot take the swift reversals.   Good Luck.

SheepDog-One's picture

'Initial claims of 380,000 are viewed as a slowdown in hiring'....LMFAO. 

tempo's picture

Germany needs the euro and will abuse the So EU countries to keep it in place. If the euro goes so goes the central bankers house of cards. Thats the real "black swan" and its every banker/country for themselves.

Harbanger's picture

Some people believe that German and French banks lent money to the PIIGS so that the PIIGS could buy German and French goods and services.

buzzsaw99's picture

the fed doesn't care who is president they own both sides. as for independent they don't want to be told what to do they want to dictate to the gubbermint what to do. One wrong move and the stock market gets it. flipping extortionists.

DeadFred's picture

They already know that Obamney will win the election

SheepDog-One's picture

The only election decision for the 'elite' banksters is who would be a more suitable puppet for them. I think they want Romney in there because hes a white republican, the most hated thing in america today, to take all the heat when the shit hits the fan.

So, if that happens to be true which I strongly suspect it is, they want Obama to appear to 'fail' a bit so a summer market crash is highly likely contrary to most belief that its 'all-out to ramp markets thru summer', in my opinion anyway.

Harbanger's picture

I believe a black Republican is hated much more than a white one.   At least by the MSM.  As far who the the "elite" prefer, Goldman Sachs gave over 3x more money to the Obummer campaign. 

FinalCollapse's picture

My thinking is along the same lines. I thought that the engineered crash would happen by now. It makes a lot of sense to crash the stock market to make sure that new puppet moves to the White House. If not spring then summer...Romney is totally controlled by AIPAC/Wall Str.

Dr. Engali's picture

It will come to bullets and bombs eventually. By trying to hold the whole thing together they are just creating more animosity.

buzzsaw99's picture

Not going to happen. Ever since the bankers took over the government in 1913 we have had nothing but peace in our time. [/sarcasm]

SheepDog-One's picture

Thats what I think, all the market ramping for 'happy times feelings' is really just pissing people off. Theyre broke and the daily INDEX ramping (not really stocks since 401K's are sucking) is just angering most people. They know good and well theyre not benefitting at all from it.

zot23's picture

Ummm ... there is a chance, however small, that the US Civil War might have had something to do with slavery as well.  

Plus, when that "war" began, the elites rolled out from Washington in carriages to watch the initial battle firsthand.  They thought the Northern Army would power over the South and be back in time for tea.  It wasn't until the bodies really started piling up that folks realized this might take a while (like 3 months instead of 1.)  Not many entered the conflict with the grim resolve to march off to glory or death with no alternatives, they loosed the beast and spent years running to keep just out of it's jaws.  Europe will be no different perhaps, but we won't know it until it happens.

BlandJoe24's picture

Why in the last several days is the USD, as measured against the other major currencies via the US Dollar Index, going down and down?  Yes, we have bad Dept issues, but the other countries in the index (spare maybe Switz) are worse, so relatively, USD should be rising.  What's going on?

bnbdnb's picture

Everyone is long the dollar, so the central banks are making sure the shorts go away.

BlandJoe24's picture

Thanks, but i - sorry, fx beginner - don't quite understand what you're saying.  Why would lowering the dollar "make the shorts go away"?  And how does that benefit the central banks?  And lastly - how do central banks affect the dollar value as reflected in the fx trade?  Thanks!

bnbdnb's picture

Perhaps its not central banks, but when the sentiment is swung to a stronger dollar, yet the dollar falls, dramatically, someone is manipulating it. Its to provide the illusion things are better, and to kill speculators.

Basically, don't follow logic, follow hopium.


BlandJoe24's picture

ok, thanks.  i think i get the formula (opposite of all reason and logic) that you're trying to convey for understanding the situation:  

hopium + ruthless profit seeking at "highest" levels (willing to "kill speculators")