Bernanke's Cheat Sheet: SocGen Lays Out The Probability Matrix Of The Fed's Six Options

Tyler Durden's picture

We are sick and tired of speculating what Benny and the Inkjets will decide tomorrow. The truth is nobody knows, probably not even Benny (unlike that other guy who got a haircut at the Marriner Eccles building today and who speaks in tongues). So here is a quick and dirty cheat sheet from SocGen giving the probability to each of the six possible options that the FOMC can pick out of Bernanke's magic hat. With over four hours from open until the "Rien ne Vas Plus" is called, compulsive gamblers should be able to put some good money down on the trifecta.

(1) Operation Twist (duration extension): mostly priced in - impact minimal,

(2) Cut interest on excess reserves (IOER currently at 0.25%): possible, but no surprise factor and could backfire (negative impact on domestic banks, money market funds, reduces GSE incentive to lend to banks),

(3) QE3: market upping probability of QE3, but still likely positive impact,

(4) Pledge to keep balance sheet unchanged for a long time. Medium probability - a much cheaper option for the Fed than QE3,

(5) Setting explicit inflation/employment targets: low probability - Fed moving to increased transparency, however can’t see Fed giving up discretionary mandate just yet,

(6) Setting explicit GDP targets: a very bold move, much more inflationary - very low probability. The most likely scenario is Twist + some combination of 2 & 4, with the markets rallying initially whilst debating the real impact and sellers try to fade the move (starting around SPX 1250). If we do get QE3 then clearly 1300 becomes a more attainable target.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
espirit's picture

Bob, I don't like the prizes behind those six  - can I see what's behind door number seven?

Strike Back's picture

Well Jim, we normally don't do this, but since you asked:

Yes_Questions's picture



I'll take St. Carlin for all your stuff, Alex.

FEDbuster's picture

Do you think they use a Ouija board or a Magic 8 Ball to make decisions?

Yes_Questions's picture

Chicken guts and tea leaves?

FEDbuster's picture

Giant Wheel of Fortune or plain old Dart Board?

Ahmeexnal's picture

A bag lady's advice on economics is far superior than SocGen.

Stupid cowards, won't even let the market short them.

FEDbuster's picture

I was just speculating on how the FED makes it's decisions.   SocGen is a dead man walking, so who cares?

The FED board members write their ideas on a small piece of paper, then they are all put in a hat and the Bernank draws the winner out while wearing a blindfold? 

Yes_Questions's picture

The decisions are likely intended to ensure WRC status of the USD.  Forcing lesser Central Banks to monetize debt and crash may be the MO.  How is too much to grok tonight.  Magic 8 ball will get back to us. 

Michael's picture

It has been suggested, for the super spectacular thing the US central bank will do tomorrow, Ben Bernanke will tender his immediate resignation. Others suggest The Bernanke will shoot himself in the head on live TV for maximum effect.

My preference leans toward the latter suggestion. 

This series of videos is for you Big Ben;

Just watch this shit if you want to know everything that is fucking wrong with our country and the rest of the fucking world.

best of walstreetpro2 (greatest fuckin hits) - 1 of 3

best of walstreetpro2 (greatest fuckin hits) - 2 of 3

best of walstreetpro2 (greatest fuckin hits) - 3 of 3

The Limerick King's picture



What news does the Chair-Satan hold

What lies will the public be told

Will he twist, cut, or print?

He has sent us a hint

Just look what has happened to gold

FEDbuster's picture

Kevin (walstreetpro2) said he was thinking of making some new videos,but that was over a month ago.  Sure miss his videos,

Kiwi Pete's picture

I just asked the magic 8 ball if Ben will print. Answer is 'Most Likely'. 

FEDbuster's picture

Benny asked the Magic 8 ball, "should I print?", and the answer was "Most Likely", too.  Then he spun the Wheel of Fortune, and it stopped on $1 trillion, just missing "bankrupt" again. 

gmrpeabody's picture


"Benny and the Inkjets"

Too phukkin funny!!!!

JoeSexPack's picture

Laughed out loud at that one!


Needed it since I'm working late in CA.

HardlyZero's picture

Getting images of a Bernanke Rorschach Spin Art...its like a moving picture with George Washington stuck in the center of a black hole.


Why, Mr. Anderson, why do you persist !

Soul Train's picture

Door Number 7 is the best one yet.

No IRS taxes for two years. Reduce deficit by laying off IRS employees  during this time.

Sure fire way to get the economy on the up and up, and the government off our backs. And the most efficient way to play the QE game and the money back where it belongs. The people.

Absalon's picture

Door number 7:  LSAP - the Fed buys commercial paper instead of treasuries to drive down loan rates for business.

FlyPaper's picture

i wonder if SocGen has 6 options pre-determined for how they will wind down their operation and/or nationalization?

SumSUN's picture

What is the probability of Bernanke starring at the ceiling for a good minute then turning to the crowd and announcing in a monotone voice "All your money are belong to us", then the world explodes?

FEDbuster's picture

I would rather see the Bernak come on TV (flanked by Jim Cramer and Steve Liesman) and have this happen:

slewie the pi-rat's picture

here's slewie's entry: send every head of household below the poverty line in the US a check for $1000

hmmm...maybe prez0 doesn't need to play the "justice" card to get re-elected, now that it's being played on his styoooopid ass...

Al Huxley's picture

You don't seem to understand the rules of the game. What actually will happen is that for every US citizen below the poverty line a check for $1000 will be sent to a TBTF financial institution who will deposit it risk-free at the fed, generating idiotic bonuses for a bunch of fucking morons whos' big intelligent move in life was to sell their souls to a tbtf instition. Not to worry, though, because the average below-the-poverty-line American is too busy watching monster trucks, NASCAR and American Idol to give a fuck about how the country's being stolen from them. Bread and fucking circuses FTW.

Yes_Questions's picture



Pvt. Joe Bowers: Man, I could really go for a Starbucks, y'know?
Frito: I don't really think we have time for a handjob, Joe.

slewie the pi-rat's picture

hey, shithead al!
fuk you i don't understand, asswipe!

Elmer Fudd's picture

Only 10 Benjies per household?  C'mon, that helicopter can hold way more than that!

AndrewJackson's picture

The fact that doorway # 6 is even getting mentioned is indeed disturbing. We definitely are getting closer to the proverbial wall. Fewer and fewer options available and constantly upped doces of heroin (stimulus). The only thing I can take from it is to load the boat (not literally) with pms and commodities. 

Raynja's picture

they didn't even bother including 'we'll watch the situation carefully and be prepared to step in'

espirit's picture

they didn't even bother including 'we'll watch the situation carefully and be prepared to step in' ... shit.

Popo's picture

Option 7: QE3 / Operation twist combo, coordinated with direct Treasury handouts to Main Street (a la Bush taxcuts) - and all cleverly rebranded by the Fed in a vain effort to appear to be trying something new. CNBC and Bloomberg and Krugman all chime-in that the move is "brilliantly original" while the blogosphere instantly sees through the spin.

i.e: a shock and awe combo of everything that has already been tried, spun to sound new.

espirit's picture

If they print though, most will have to prop the Euro.

Outrage in 3..2..1..

xtop23's picture

 Were already propping the Euro

chump666's picture

I like SoGen...they called the EZ doomsday trade yr back.  They are on the money now on the FED, esp the rallaying part. Major meltup to meltdown (following day)...hopefully

Al Huxley's picture

SocGen lays it out? I thought they were dead.

junkyardjack's picture

He should set explicit SPX targets.  "With immediate effect, the Fed will no longer tolerate the SPX below the minimum level of 3000. The Fed will enforce this minimum level with the utmost determination and is prepared to buy securities in unlimited quantities."  I think that'd do the trick

Theta_Burn's picture

Hell hath no fury like a MU scorned

bankonzhongguo's picture

It does not matter.

Their World has decoupled from the "real" for some time. 

Probably since you stopped watching CNBC.

I don't know of one person that is making more money compared to last year, yet trillions are sloshing around the World every 10 seconds.

The price of energy, be it food or oil, is going up and taking a bigger piece of everyone's pie.

Watch what the Fed "does," read all about GS and SG and then take a walk outside.

People are getting poorer by the minute and nobody can (will) stop it.

bgilliam83's picture

I expect everything but #4.  Don't let me down, Ben.

Stack Trace's picture

What if he does all 6? They could call it Operation Tango-ChaCha-Twist with an extra helping of Eating your Peas.

Belarus's picture

We are sick and tired of speculating what Benny and the Inkjets will decide tomorrow

And, might I add, just sick and tired of being sick and tired of Benny and the Inkjets. Naturally, we are all sick and tired of these cocksuckers. There is nothing free about a market that can and will be moved by a jackasses mouth. 

bgilliam83's picture

When is this asshole gonna drop a money bag onto my porch like he promised

tawdzilla's picture

"When is this asshole gonna drop a money bag onto my porch like he promised"

You must have misheard him...he said he was going to drop kick you in the crotch.