Citi Previews Bernanke's Testimony To Congress Tomorrow

For a February 29, tomorrow will be even more remarkable, because while all eyes will be on the LTRO, just waiting for their chance to start fading the expansion of the ECB's balance sheet (which will hit a record €3 trillion+ as of market close tomorrow, or well higher than the Fed's $3 billion), some may be forgetting that across the pond, our own Bernanke will be holding the first of his biannual Humphrey Hawkins presentations to Congress hours after the LTRO news has printed. Expectations are high that despite $2 trillion in liquidity flooding capital markets in the past 6 months, that Bernanke will not dare to remove the punchbowl. Here is Citi's Steven Englander with a preview of what (not) to expect.

Most clients are dubious that Fed Chairman Bernanke’s testimony tomorrow will have any impact on FX markets. The view is that the testimony will echo the FOMC Statement and subsequent press conference comments and cover no new ground.  We think that it matters more than markets now expect. The two points of reference for FX: 1) will Bernanke endorse the better than expected labor market/confidence data or focus on the somewhat weaker than expected demand side data that have emerged in recent weeks; 2) will he open any door to data dependence rather than the disappointing pace of recovery.  US medium term yields have basically reflected expectations of when the Fed might begin to shift off the zero rates policy. Yields on 5-year treasury notes, hit multi-generational lows on January 31, and have since risen about 13bps. It is not earth shattering given that yields have dropped 120bps over the last year, but it has been enough to support USDJPY in recent weeks.

The other FX question is whether a downbeat Bernanke who stresses disappointing growth and caution on prospects is good or bad for risk appetite.  We think that downbeat comments initially produce risk-off  reaction, but that FX investors will eventually take comfort from the low discount factor that such comments imply and risk-correlated currencies rally.

Comments

[transaccountin]

To infinity and beyond!

[greased up deaf guy]

biannual or semiannual?  i know, i know.  details, details...

[TruthInSunshine]

Tomorrow's drinking buzzword is "transitory."

Beverage must be at least 80 proof.

Look, I understand that it's early, but this is the price we pay to live under a fractional reserve banking protectorate of price stability.

[stocktivity]

Yep...it doesn't matter how bad the outlook...the market never has a down day. It's all Bullshit!

[Mr Lennon Hendrix]

Bernanke's testimony:

Uhm...uh....umm.....ummmm..........

[Hippocratic Oaf]

Speak up Ben, the helicopter is a lil' noisy today.

[DavidC]

Yes, it's bloody annoying. For the same reason, much as I like Michael Hudson's stuff, I can't watch him on video or listen to him on radio.

DavidC

[mayhem_korner]

There goes Uncle Warren's gold call.

[kito]

ben may not remove the punchbowl, but there is zero chance he will spike it..................

[Schmuck Raker]

Bernanke Testimony....

as bullet points:

• Lie
• Lie
• Lie
• Lie
• Lie
• Lie
• Obfuscation
• Lie
• Lie

[GoldenGal]

The man with the Golden tongue speaks tomorrow!!!!!!!!!!

[THECOMINGDEPRESSION]

WOW! All I can say is the TURD has been wrong for a solid month straight on GOLD and SILVER with his watch out, lookout, beware bullshit..Christ its getting repetitious. NOW Brother John is a PRO.

[The Swedish Chef]

On the other hand he has a clear disclaimer on the site... ZeroHedge is pretty wrong too, the bearish case has been assraped. Don´t see you complaing about that over at TF.

[THECOMINGDEPRESSION]

Go read that site and see if you have ONE negative post against the TURD. There are none.. because they get REMOVED. DUH

[Mr Lennon Hendrix]

It's a blog for goldbugs!  That would be like finding a kid in a candy store who doesn't enjoy it there.

[Watchman]

I am a huge goldbug and silver too but I don't go there for there are things going on that don't sit well. Most who go there are somewhat mindless but not all.

[tekhneek]

Drawing pictures on an hourly chart...

That is all I need to say about that.

[The Swedish Chef]

Could be, I don´t know. 

But still, do you rely that heavily on what ONE guy with internet fame says? Back in the day there used to be this thinkg called thinking... Use that instead of what some PM bug says.

[Watchman]

Don't know if they get removed but he sure has them kissing his behind. I guess you do that when you're a Turdite. Quit going there last summer as I found myself disagreeing more than agreeing. I can think for myself and since leaving there my account has done much better. If what you say is true I have been on a different path as of late and I am quite happy with the results. I did find the Turd very much self absorbed which is a big turn-off.

[Floordawg]

Exactly, the site is monitored... for pussies. The sycophantic behavior seen there is unmatched.

"FIRST!" ...fuckin' faaaags..

[Mr Lennon Hendrix]

You waste your time writing about Turd here.  More than anything, Turd is a friend, one with talent, but a friend first and foremost.  You are walking in a den of brothers, and choosing to yell into the room about one of us.  If you see Turd here, I wouldn't step in, because that would be against the rules, but when you talk shit behind his back, I will call you out.

Turd built a site based on his rep.  If he didn't have a good rep, he wouldn't have a good site, and if you look to your left, I think you will see just how good it is.

[THECOMINGDEPRESSION]

WTF kind of english garble is that?

[Mr Lennon Hendrix]

Instead of trolling the blogosphere why not try and get laid?  It may take the edge off your disdain for successful people.

[THECOMINGDEPRESSION]

yes, successful in losing money with mf global. you know the one..that successful talk about not playing with paper, then go and do it. the dumb readers love that dumb shit

[Mr Lennon Hendrix]

Do you have anything else to discuss except your agenda with Turd? 

[Watchman]

Hendrix, really? You think he's your friend? Do you think he does what he does out of the goodness and generosity of his heart? Really spend some time thinking through things Hendrix. You may not want it to be true but it is.

[Big Fish]

easy easy money for nothin'....

[Mr Lennon Hendrix]

easy easy chicks for free....

[putaipan]

meanwhile in italy.....

http://michael-hudson.com/2012/02/mmt-theory-as-an-ecb-alternative/

big-up MMT ! vote ROCKY ! buy another ounce of silver !

[mantrid]

The basic thrust of our argument is that just as commercial banks create credit electronically on their computer keyboards (creating a bank account credit for borrowers in exchange for their signing an IOU at interest), governments can create money. There is no need to borrow from banks, as computer keyboards provide nearly free credit creation to finance spending. The difference, of course, is that governments spend money (at least in principle) to promote long-term growth and employment, to invest in public infrastructure, research and development, provide health care and other basic economic functions. (...) In 1933, Franklin Roosevelt nullified the Gold Clause in U.S. loan contracts, enabling banks and other creditors to be paid in the equivalent gold value. But in his usual neoclassical fashion, Mr. Krugman ignores the debt issue (...) He rightly criticized the Republican party line that blames European welfare spending for the Eurozone’s problems, and also criticizing putting the blame on budget deficits.(...) (...) But he left out of account the straitjacket of the European Central Bank (ECB) unable to monetize the deficits, as a result of junk economics written into the EU constitution.

OMG if Krugman is neoclassical then what is this lunatic labbeled? even Keynes wasn't that keynsian. if these people go around Italy and spread their hallucinations we're gonna be billionaires. growth, bitchez! namely in prices only.

[putaipan]

just one part of the bigger picture...balanced with land/rentier tax....

[mayhem_korner]

Ag must think he's speaking today.  Up 3%+

[SmoothCoolSmoke]

Tyler, on LTRO:  What is the bullish/bearish break line.  Or is it all bullish no matter what?

[IndicaTive]

  http://www.zerohedge.com/contributed/ltro-and-markets

"The difficulty as always is trying to forecast the reaction of the markets. Given the rally we have seen from mid-December, it is certain that much of the impact of LTRO has already been priced in. In the near term, it would take a very large LTRO operation to significantly move the market higher, while a package on the order of the EUR 300-500 billion currently expected would probably disappoint."

[Snakeeyes]

I dread that Bernunks will call for MORE mortgage stimulus given the CS numbers today.

http://confoundedinterest.wordpress.com/2012/02/28/case-shiller-20-city-house-prices-fall-4-in-december-is-2012-the-new-recovery-summer/

[riphowardkatz]

 1) will Bernanke endorse the better than expected labor market/confidence data or focus on the somewhat weaker than expected demand side data that have emerged in recent weeks;

He will both endorse and dismiss. Good but...

2) will he open any door to data dependence rather than the disappointing pace of recovery.  US medium term yields have basically reflected expectations of when the Fed might begin to shift off the zero rates policy. 

He will both endorse and dismiss. Good but... housing slow etc

Obfuscation rules the day. Confuse the markets, buy time, pray. 

[thedrickster]

Wrong thread, all hail the Bernank.

[flyme]

Fab, a bit of pinocchio action on the deck.

[DavidC]

http://www.youtube.com/watch?v=yiJ9fy1qSFI

DavidC

[mantrid]

oh I'm gonna long some more tradition then

[Hedgetard55]

Ben's (tiny) balls are in a vise. If he continues the easy money, energy skies and kills the economy. Riots ensue. If he tightens, the stock and bond markets (as well as commodities, including PMs) crash like Danica at the 500.

[The Beam]

As a Congressional Member I would ask a few questions:

I would ask Ben Bernanke to explain the Dollar Swap market and how it works.
...
I would ask him what is our current exposure in the Dollar Swap market.

I would ask him to explain gold swaps.

I would ask him to state how much, if any, exposure we have to gold swaps.

I would ask him why we agreed to back stop BofA's European Deriviatives (have we ALREADY FORGOT ABOUT THAT?)

I would ask him to elaborate and give communications he had with the FDIC (which led to arguments by the two organizations).

I would ask him if we anticipate doing it with other American banks.

I would ask him if we plan on backstopping American banks exposure to ASIAN derivatives.

I would ask him the current average length their Treasuries in holding.

Those are just off the top of my head.

[tekhneek]

Good questions but you can't really believe that anyone will ask them, can you?

This is a game of publicity not a game of reality. The more positive spin the happier people are and the more iPad 3's they'll go out and buy.

You can't be constantly bringing up reailty in these meetings -- it's too depressing. I can't even watch them anymore. It's like these people have their own economy on Mars and that's what they're discussing.

Questions/comments I foresee:

1. "Now Mr. Bernanke we really appreciate you taking the time to speak with us about this. When do you see unemployment going below say, 20%, err shit, fuck, I mean, 7%?"
2. "I'm happy that food stamps is on a sustainable incline. Can you comment on the recent drop in unemployment requests?"
3. "Baby boomers aren't going to retire, they're just going to work til they die so, that's good news." (I apologize, I know this is in bad taste, but it's true...)
4. "What does COLA stand for?"
5. "Can we take more things out of the CPI, or "weight" them more "dynamically" please?"
6. "Inflation seems to be under control, but what if it gets out of control?"

Ad infinitum, world without end, amen. The bullshit continues.

[The Beam]

Oh how true. I just fell in Zero Hedge love :-)

[sbenard]

Bubbles Bernanke, the perfidiously prevaricating prelate of printing!

[Goldilocks]

3 out of 8 lookups in one sentence...
+++fantastic~~~!!!

[Clowns on Acid]

Questions for Ben Dover Bernake:

If everybody is now supposed to buy "everything", will the means of production get more expensive?

If the means of production get more expensive, will companies (small and large) hire more employees?

I know that your theory and indeed practice is based upon saving/baling out/ rebuilding the banks and real estate developers (especially in NYC). (Well ok...re develoipers are the same as banks given your ZIRP policies for the past 10 years).

So once the banks are "saved" and the re developers are "saved" and commodity prices are trading much higher - why would businesses want to hire the marginal employee when they know that either the dollar will fall even lower (increasing their means of production) or that interest rates will go up (increasing their debt service)...or both?

Mr Ben Dover...can you please explain how you will manage these variables with timelines and the probabliltiy that you will implement more QE3, FX swaps with ECB, or motrgage paper buybacks.

**** - Please send this to a Congress person with some balls...or ..