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Goldman's Take On Bernanke's "NEW QE" Speech
While it appears to us that Bernanke's message was loud and clear, there are those who need validation and peer-confirmation. Such as that from the firm whose alumni run the Fed, namely Goldman Sachs. Below is Jan Hatzius' take on the "surprising" Chairman speech which essentially said QE can and will come at any time there is a downtick in the market, masked by the unemployment rate rising to its fair value, as estimated by Gallup, somewhere around 9%.
From Goldman Sachs:
BOTTOM LINE: Fed Chairman Bernanke argued that the outperformance of labor market indicators recently may reflect a “catch-up” from unusual weakness in jobs during the recession. By implication, continued declines in unemployment will require faster GDP growth in the future. He also continued to argue that most of the increase in long-term unemployment is cyclical rather than structural in nature. Chairman Bernanke’s read on the state of the labor market was consistent with an accommodative stance for monetary policy—though he did not directly call for additional easing.
MAIN POINTS:
1. Federal Reserve Chairman Ben Bernanke spoke on recent labor market developments before the annual meeting of the National Association for Business Economics (NABE) today. His comments focused on two aspects of the current debate on the labor market: (1) the outperformance of labor market data relative to GDP growth; and (2) how much of the increase in long-term unemployment reflects cyclical rather than structural factors.
2. Chairman Bernanke discussed three alternative explanations for the better performance of labor market indicators recently. First, the surprisingly large drop in the unemployment rate may reflect statistical noise, and that GDP could be revised higher in the future. However, he said that there is no specific evidence to support this conclusion at this point, and in fact Gross Domestic Income (GDI)—an alternative measure of aggregate activity—was weaker than GDP over the last year. Second, the decline in the unemployment rate could be overstating the improvement in the labor market, as the drop partly reflects potential workers exiting the labor force. However, Chairman Bernanke argues that the decline in broader measures of labor underutilization (he cites the BLS’s U-5 measure) casts doubt on this explanation. Third, the large decline in the unemployment might reflect “a catch-up from outsized job losses during and just after the recession”. Chairman Bernanke ultimately finds this argument most compelling, and presents some simple supporting evidence.
3. The chairman’s comments on the recent decline in the unemployment thus cut two ways. On the one hand, the drop in the unemployment rate is likely a real and encouraging development. On the other hand, because the outperformance compared to GDP likely reflects a catch-up from past weakness then, in Chairman Bernanke’s words, “further improvements in unemployment will likely require faster economic growth than we experienced during the past year”.
4. The second portion of the Chairman’s speech focused on whether the increase in long-term unemployment reflected cyclical or structural factors. Consistent with his existing views, Chairman Bernanke argued that elevated structural unemployment is mostly a cyclical phenomenon, and that structural factors can explain only a small (and possibly temporary) part of the increase.
5. On monetary policy, the Chairman said that faster growth—perhaps needed to see further declines in unemployment—“can be supported by continued accommodative policies”. He also argued that because the increase in long-term unemployment was primarily cyclical, “then accommodative policies to support the economic recovery will help address this problem as well”. These statements were not necessarily calls for additional easing, but they clearly supported the Fed’s current accommodative stance.
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Wow.....it is new.....it's so shiney you can hardly look at it.
The new, new QE.
Be the first on the block to trade the old QE for the new QE.
yes! now i feel like i've caught up with the joneses.
Title should have read: "Goldman's prepared take on Bernanke's 'NEW QE' Speech".
Goldman Sachs, "we are the federal government".
Must be time for more WS/IB bonuses. Without which the Hamptons would suffer an average person's existence.
And just like the New New Ipad, they burn a hole in your lap and toast your balls!
Goldman...or QE?
Goldman and QE, cause they have their fingers crossed behind their back
The new, new QE.
But hardly surprising. The smackdown in precious metals was needed to allow the Benrnake the space to announce more QE, so as not to make the effect of it take off from an already-high price.
Once you've seen the playbook a few times, nothing surprises. Strong hands. Period.
OT: I posted an article in the forums; no feedback. I don't know whether it's over people's heads or just poorly written.
http://www.zerohedge.com/news/2012-12-23/hjalmar-schacht-german-pre-war-...
Yes, it all felt like prep work.
The "new QE" is more likely going to be "more Operation Twist".
Bernanke is trying to use employment as distraction to justify accomodative policies that simply will not address the underlying issues of long-term unemployment. Even Uncle Ben himself admitted that we are not likely to grow ourselves out of this problem-- though his prescriptions suggest totally the opposite.
Here's the reality: the Fed desperately needs to suppress the long end of the Treasury curve-- or the government's debt and interest burden becomes unmanagable. An additional round of QE could be justified if deflation was abundant... but it isn't. I think that the only thing that really matters to the Fed at this point is to prevent a possible government debt implosion.
Why? Because the Fed fully endorsed the concept of unprecented deficit spending (and the explosion of debt that went with it) in the first place.
So... it appears once O-Twist 1.0 winds down in June, we get (at least) O-Twist 2.0.
Interstingly, enough, the bond market calls BS on the whole thing and bids long-term Treasury yields higher.
This is going the get real interesting the next few months...
party on Garth!
http://www.youtube.com/watch?v=GCo5y8FtxRU
Chairsatan just loves to sacrifice babies ...like beasts upon Moloch's flaming alter.
On monetary policy, the Chairman said that faster growth—perhaps needed to see further declines in unemployment—“can be supported by continued accommodative policies”.
Accommodate THIS Fed bitch.
A nice Diss from the Cog...
I'll say it again, since nobody seems to remember.... Rational Expectations Theory! The public knows the difference between real growth and fake sugar high growth created by monetary policy and reacts differently to each scenario.
Can someone please send a memo out to the HFT algos that QE3 is coming, but ONLY after a significant downtick in the market (at LEAST 10-30 percent).
Man the shit must REALLY be bad behind the curtain if they have to come out with daily QE rumors, and now 'Perma QE'? Just these anytime you see a slight downtick so now the markets are teflon coated bulletproof?
And We haven't heard Iran news in a week neither.
Market is very anemic and needy.
They have to follow thier dual mandate of misleading the public while giving hand-jobs to bankers.
Another excellent Tylerism: "Ctrl-Preserve". Pretty well sums it. Thanks!
What will the Chinese villagers do? Demand more gold.
And the Indians, and the Turks...
SELL THE GOLD BEN!!
NO NEED TO STICK TO TRADITION!!!
YOU'LL SAVE BILLIONS OF TREES BY NOT PRINTING!!
SELL THE TUNGSTEN!!
I have on many occasions, accomodated your mom
"Those who wish to understand the Federal Reserve must first understand the Kabbalah." -Madonna
(fake Madonna quote)
ZH has been claiming since last June QE is coming
even a broken clock is right twice.
It aint coming unless SP breaks 1000
Hey idiot, ZIRP is QE! Unless of course you really believe that there is no real cost for creating capital without adding any real value to the economy.
No need for names. I am stating my view.
It amazes me this site, best financial site on web, but if someone dares to have a opposing view, they are vilified. We should be having open dialogues.
And no, ZIRP is not QE, get your facts straight
Your view isn't opposing, it's just wrong.
And if you cannot see ZIRP for what it is, perhaps this site is not for you- Motley Fool sounds more your speed.....
For you to be 100% certain that my view is wrong, and to say it out loud, maybe you should be on Motley Fool
Anyone who says they are 100% certain, is a FOOL
Uh, how do you reckin they acheive ZIRP?
Watch it, someone got junked 27 times in a row for thinking Ron Paul might be wrong and I got junked 14 times a row for laughing at him getting junked 27 times.
Sorry, couldn't resist.
ok, it was coming no matter what but sp 1000 isn't going to happen. it will only take a 6 to 8% correction for accomodation to commense...
thats seems to be the view here, I respectfully disagree. If anyone thinks the market will never go down agian, they are VERY VERY wrong.
The Market will eventually call the FED's bulff, you can manipulate over short term, but eventually market will do what has to be done.
agree, the market will tank someday. but, we're talking short term accomodation and it will happen with the correction i'm suggesting and the market will melt-up again...
GREAT so now we just have totaly artificial markets supported by 'I'll flood in more fake money any time the market takes a little lurch down' and HELLO $120 new floor for oil!
AH its a new dawn in america, sure is!
Tim prints, Ben buys. Train to hell!
Hamlet dilemma was To Be or not to BE....BERNANKE has it easy: between printing or not printing the answer IS: PRINT MORE AND MORE PAPER TILL THE DOLLAR IS WORTH ZEROOOO!!!!!
GS and the Fed can both rot in the molten masses of hell. I f'ing hate them!
So this is the Chairman wondering whether companies are going to throw out the super efficient, 24hr working, no strikes, mistakes or vacation taking machines that they just installed to replace those silly and inefficient humans?
Good luck with that cycle Ben.
The fact that Ben is on a speaking tour to specifically bash gold is very telling in my opinion. It must be really bad behind the scenes...
absolutely 100%, they're scrambling to buy time until all the Fee Mah camps can be made fully operational.
Bernanke's speeches should just read something like this:
"The stock market went down a bit last last week. This is deflation and this aggression will not stand. It must go up every day and every week, or I will print more money and debase the currency even more to give the appearance that my policies are working. Having destroyed the housing and bond markets in enormous bubbles, it's the stock markets turn to make everything appear great. It's had it's 10 year rest and it's time."
Retail investor bait.
mui correcto Bubba! They desperately need to unload...! 1414 was last week's top, we're almost there...! Friday is window dressing...!
Bingo.
Anyone who believes the Fed can justify QE3 deserves the loss they're about to take.
Not saying it will or will not happen but is laughable to think the Fed needs to justify itself. Or maybe I should ask who do they need to justify themselves to?
The only ones they are accountable to are their egos.
well, you're half right. they're accountable to their shareholders = the elitist of the elite
well, you're half right. they're accountable to their shareholders = the elitist of the elite
Absolutely correct. And it also happens to be that those are the same people with the most to lose in any real deflation. Therefore, the answer is clear.
As false flags go this one is the most certain one coming... In spite of all the damning information on Trayvon, the media will ignore it and the riots will occur.
George Zimmerman’s black friend Joe Oliver describes him as “not a racist.” He also says that Zimmerman probably used the word “goon” on the 9/11 call. He said “these goons always get away.”
Note: Trayvon Martin’s brother’s Twitter account suggests that Trayvon had been suspended from school for violently assaulting a bus driver. There is also evidence on his Facebook account that he may have been a drug dealer involved in a gang.
The real Trayvon was a 6’3?, 160 pound, 17-year-old football player with gold teeth and multiple tattoos who posted to Twitter as “No Limit Nigga.” He was in Sanford because he had been suspended from high school in Miami. The real Trayvon attacked George Zimmerman from behind, knocked him to the ground, and had broken his nose and was beating him when Zimmerman shot and killed Trayvon in self defense.
Zimmerman is not a racist, pointing out that he and his wife mentored for two black children for free. "When I asked this mother [of the mentees], who trusted [Zimmerman and his wife], and she's an African-American, if she trusted George Zimmerman, she said she did, and I asked her if there was anything that caused her to believe that she was a racist, and she said, 'Absolutely not.' And I said, went further, 'Did you ever hear him use racial slurs in any time that you'd been around him?' And she said, 'no' as well," Also the fact the Zimmerman mentored two blak kid for free will never crack the surface.
So fuck the truth, reason and logic Amerika... some people know the path to get what they want and they are facillitated by the media and government that believe it should be taken from us.
Turd show du jour
You will undoubtedly enjoy this http://www.lsnewsgroup.com/2012/03/23/trayvon-martin-shooting-being-used-for-political-personal-posturing/
The herd really needs to be thinned....
The only thing I can't reconcile is why Zimmerman continued to follow Trayvon after he was repeatedly told by the 911 operator NOT to do so. I suspect what happened was that Trayvon thought he was about to be jumped, so he turned the tables and jumped Zimmerman first. Zimmerman may have shot him in self-defense, but if he had stopped following as he was told, it never would have happened.
maybe because 911 operators can be complete idiots.
Examples
Just watched a show where the 911 operator told a lady not to follow a car with a screaming girl in the back seat who was shortly thereafter killed. The ladies report of the screaming girl was never forwarded to police.
911 operator in our community sued for not being able to take micro naps.
Personally spoke with a 911 operator before?They are not geniuses. I wouldn't trust most of them for a second. They drop the ball all the time
El
WHERE you there???........................no, so your opinion is just like eveyone elses....................worth what you paid.
911 Operators do not have any authority to tell any American their rights.
Zimmermans job was Neighborhood Watch Patrol....................he did not have to call 911 at all.
Were you there?
Fuck the 911 operator, not likely anyone can protect anything if you are told "return to your home and leave the thug alone"...Why bother with a watch program if the gubmint on the phone tells you "just let it happen, we will take care of it"..being they can't take care of shit?
So, if Zimmerman had listened to 911....do you think anyone would have ended up dead? I'd say probably not. BUt, can't have that wimpy-ass outcome in "Dodge City", FL now can we?
Protect from what? Zimmerman by all accounts was following Martin without Martin even knowing at first. That means there is no defense or need for defense. It also means use of force is premeditated, opening up more serious murder charges. The videos now show there were no injuries as stated by police & by Zimmerman so that's falsifying evidence (false police report).
That's just how the facts add up.
AssFire
As false flags go this one is the most certain one coming... In spite of all the damning information on Trayvon, the media will ignore it and the riots will occur.
Yes, and they will be ass kissed by the MSM, and Obamma has already YET again passed judgement on a situation w/out the facts.
Run the country FOOL, and leave the race baiting hatred to the Panthers, and the rest of the Left black community.......that NEVER reads or waits for the facts.
When they get them, it still makes not a whit...............
I for one am SICK and tired of reverse racism,and PC BS being used as a tool for gun control,and race based inflammation and HATRED.
Oh and I forgot --- The Permanent Income Hypothesis (thank you Milton F). I'll give you money now but promise to take it back later ==> Saving of "free money" so that it can be returned when called upon.
Why don't they just make a lottery for the bills in existence and refuse to honour the numbers that come up. That way you'll have to spend as much as you can as fast as you can (Gresham's Law) to make sure you don't end up with "retired" paper.
<deleted double post>
New QE? Does it heat the market as much as the New iPad?
I can't wait for the QE LTE.
So carrot again? Stick in April?
So to sum up, if this is a cyclical problem, we will print. If this instead turns out to be a structural problem, then instead of printing, we will print....
...Is that $50 silver I smell just around the corner???
HAHAHAHAH If you smell something its not smoke
yes, 50 & 1815/gold is around the corner. http://flic.kr/p/btihms for math on related price movement. description in image contains links to other images with other math indicating dates : 2012 apr early, 2012 aug late, july likely.
QE to infinity bitchez.....this is all you need to know. Maybe I should start my own blog? I'm such a freakin' genius. And I didn't even go to an Ivy...
QE3. That makes sence... Since QE1 and QE2 (+ other accommodative measuremens) has not worked so far, i.e they have not helped unemployment to declaine, we just need to do more QE's and even in large scale as before...
Read my lips: No more inflation
Adding a little more gas the fire won't hurt will it?
BTW How long is transitory? I guess it is all relative.
Cal-Maine's Net Falls 22% on Higher Feed Costs
Gross margin fell to 21.5% from 23.9%, reflecting 11% rise in feed costs.
http://online.wsj.com/article/SB10001424052702303404704577305142013316900.html
Coincidentally or not that matched the general mills report of 11% higher input costs. Glad inflation is coming in at the magic 2% number.After May QE3 appears political and it less likely. Maybe Ben is right!! After $14 trillion in worldwide central bank stimulus and nearly everyone warning that the "sky is falling", the dollar is strong, interest rates keep falling to record low, jobs are created and inflation (ex war related oil) is low. So why not more stimulus??? Oh yes, we are slowly becoming more and more dependent on Ben for our freedoms. As long as the FED has the "pedal to the metal" there are no "black swans" in sight.
Freedoms?
Are there some constitutional freedoms they haven't trashed yet?
No. They've hit all ten in the Bill of Rights. Although with respect to the Third Amendment they don't quarter soldiers in houses, they just snowflake the house and then seize it altogether.
This is the first I've heard of the term...
they just snowflake the house and then seize it altogether
what does it mean?
I think this is right and the likely reason we will get a round now instead of later, for appearance sake.
Can we hang this mother fucker yet?!?!?
Bernanke comes out on Monday morning at 8:00 am to juice the market.
... nothing else matters. Does not matter what he says or how he says it. The market er Brian Sack buys it like everything is OK. Crazy world we live in.
When I turned on the TV and saw HIM I thought we were in trouble.
~ Butch Cassidy
We are in trouble. Investors are on alert.
Please help me, why is the market going up????
here's a hint:
http://flic.kr/p/btrSQu
You won't see a big market drop without a big oil drop. Even with oil drops in the past you can see sometimes the magical s&p500 just kept on going up anyhow.
"The BLS' fraudulent seasonal adjustments to unemployment have outpaced the more modestly fraudent adjustments made by the BEA to GDP. As we continue through the reelection season, I mean summer, expect the fraudulent GDP numbers to rise more in line with the fraudulent unemployment numbers."
That's how I read it.
Not the QE3, or the "new" QE... just the QE.
Come on people, get it right!
Lowering longer term rates part of QE has nominal impact at this pt. Buying up bank crappy assets part of QE just perpetuates the ongoing problems. Bernanke just looks like a stooge at this pt.
I don't know where I should post this but I just got an alert from Chicago Jewelers Alert about tungsten filled gold bars being found recently. Apparently the bars matched their stated weights but for some reason were suspect and cut in half which revealed the drilled holes and filling.
-1 for being two days behind...
http://www.zerohedge.com/news/tungsten-filled-1-kilo-gold-bar-found-uk
That is what I thought originally as well when the email came across but this was reported in New York. As it turns out the information in the email led me to believe this was a different event. After following through it is the same story as previously reported on ZH. I apologize.
a reminder of Ben's Track Record, one of many youtubes
Bernanke's s total failure, clips of WRONG predictions
http://www.youtube.com/watch?feature=player_embedded&v=GbOWiJ94Xvg#!
Uploaded by manifestliberty on Feb 24, 2011
Is he just a professional liar to be WRONG this often? This guy has to be smart right? How do you get to his level and be dumb?
QE just by saying there will be QE. well played bernank. well played.
this is all very sad folks
market basically near all time highs again and they are still pumping on year 4 now straight
you keep printing ben,
we'll keep stacking ...
It is amazing what six trillion $ of new debt has done for us over the last 4 years! Let's do it agian!!!!
Time to write your congressman something simple:
How many times do you think Ben Bernanke can be wrong before YOU LOSE YOUR JOB?
Disclaimer: He is appointed by Banks so his job will not be in jeapordy.