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Goldman's Take On Bernanke's Speech: "No Surprises... Market Expects Easing Action On September 21"

Tyler Durden's picture




 

BOTTOM LINE: Fed Chairman Bernanke’s speech to the Economics Club of Minnesota today contains no surprises and will do nothing to dispel market expectations of further easing action at the September FOMC meeting.

MAIN POINTS:
 
1.    Fed Chairman Bernanke’s speech to the Economics Club of Minnesota today will do nothing to dispel market expectations of further easing action at the September FOMC meeting. His description of current conditions and the economic outlook was broadly in line with other recent Fed communication—including the August FOMC statement and minutes, and his recent speech at the annual Jackson Hole conference. He said that the recovery has been “much less robust” than the Fed had hoped, and that the committee sees “greater downside risks to the economic outlook”. While he continued to say that the Fed expected stronger growth in the second half, he again pointed out that some of the causes of weakness in growth earlier in the year could be more persistent. On inflation, Bernanke noted that while headline inflation had picked up, inflation is expected to moderate as “transitory influences wane”. The Fed currently sees “little indication that the higher rate of inflation ... has become ingrained in the economy”.

2.    As at the Jackson Hole speech and earlier Congressional testimony, Bernanke again urged fiscal policymakers to consider “the fragility of the economic recovery” when returning the government's finances on a sustainable trajectory, adding that “in the absence of adequate demand from the private sector…a substantial fiscal consolidation in the shorter term could add to the headwinds facing economic growth and hiring.”

from Goldman's Jan Hatzius

 

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Thu, 09/08/2011 - 14:51 | 1647184 TruthInSunshine
TruthInSunshine's picture

Until someone/something comes out and credibly shows how jobs will be created (rather than continuing to be lost) and wages will stabilize or rise (rather than continuing to fall), you can safely place your bets that the economy will continue to worsen.

The middle class IS the economy. They spend money on "stuff" when they have money to spend. I'd venture to speculate that the middle class is responsible for 80% of the two thirds of the economy that is driven by private spending.

J-O-B-S. W-A-G-E-S.

It's not rocket science as to why every single assumption built into The Bernank's Virtuous Circle Econometric Theory is fatally flawed, nor why The Bernank is an epic failure of an economist, prognosticator and human being.

Plan/Hedge accordingly.

Thu, 09/08/2011 - 14:53 | 1647197 EscapeKey
EscapeKey's picture

The elite begs to differ. The Gini coefficient has never looked so good (seen from the top).

Thu, 09/08/2011 - 15:01 | 1647235 Cdad
Cdad's picture

Yeah, well, when you are used to raping the middle class, breaking every known securities law known to man [but not Mary Schapiro], not to mention every violation of ethics one could possible dream up...well, Lloyd is a little busy with things to understand your non rocket science.

And anyway...there it is...the totally depraved and lubed up USD studman is now loose.  And Bernanke is too busy with his useless speech to help Lloyd wrestle him back into the closet and nail the door back up.  Bidless is working the hand held digital cam, and those movies should be very interesting

Keynesians sure take a long time to die.

Isn't it time for the BlowHorn [CNBC] to start focusing on shopping stories or something?  I mean how many days are left until Christmas?

Thu, 09/08/2011 - 15:07 | 1647261 DaveyJones
DaveyJones's picture

It's almost as if...he doesn't care about the middle class 

Thu, 09/08/2011 - 15:18 | 1647334 DosZap
DosZap's picture

TruthInSunshine ,

When asked what Obama could do, to help increase JOBS, he was told GET OUT OF THE WAY.

Simple, succinct, and to the point, and true.

 

Thu, 09/08/2011 - 15:32 | 1647391 Id fight Gandhi
Id fight Gandhi's picture

Well ben didn't hint at qe3 so why the fuck tre they expecting it? They lowered rates til 2013 and Obama is supposed to save the day with his jobs plan.

How tax cuts create jobs is a fucking joke.

Thu, 09/08/2011 - 15:43 | 1647403 TruthInSunshine
TruthInSunshine's picture

Mortgage rates go to 0%, and unemployment (using U6 that was used up until Reagan's time as POTUS) soars to 28% from the now 18.6%, and The Bernank is puzzled as to why banks are reluctant to lend and consumers don't want to borrow.

In the meantime, banks are begging for TARP 2.0, as the Fed moves towards stopping payment of 0.25% interest on the 1.7 trillion in excess reserves they've been plowed with (and the Fed actually thinks of draining this via reverse repos), and the banks keep watching the roughly 4.5 trillion of mark-to-fantasy RMBS and CMBS drop to a real value of somewhere around 500 billion, representing a further 86% drop in value.

Employment (the keys to the economic kingdom; toss every other statistic out the window if this is bad or horrible) is toast.

Banks are toast (so much so that their traditional profit mechanism doesn't even exist anymore).

Housing is toast.

Credit expansion is toast.

Economy is toast.

Governments are indebted (using realistic analysis) anwyehere from 400% to 1800% of their annual GDP.

Good job, Bernank, you imbecile.

 

Thu, 09/08/2011 - 16:03 | 1647537 YHC-FTSE
YHC-FTSE's picture

The way people feel about halitosis Bernanke is universal, and I don't want to rain on your middle class parade, but how do you create jobs out of thin air? You can't print jobs. 

 

Tonight we will all hear Obama's Job (election) Speech that has been so leaked to death, it'll be like deja vu. Maybe that's why the Republicans are threatening to boycott his speech

1) It will cost at least $300 billion. Real estimate: $370 billion, including extensions on payroll tax cuts and unemployment benefits.

2) The Senate is (Also tonight) finalizing a $500 Billion increase to the debt ceiling, part of the $1.3 - $1.5 Trillion deal agreed in July.

3) As with Goldman's expectations of Sept 20th, there's a credible rumour of a mortgage refinancing deal to help 10 million homeowners with Fannie May/FM who are on the verge of default at the eventual cost to the tax payer to the tune of approx. $1.4 Trillion. 

4) As seen over the past year, asset purchases by the Fed have been ongoing in the background and will probably continue to bolster up the markets through POMO. Cost? Who knows.

 

It looks to me as though Obama is going to use up every penny of that debt ceiling increase over the next few months well into 2012. Hence the reason inflation was mentioned no less than 16 times in Bernanke's speech. At this rate, it is not going to matter a jot if jobs are plentiful because the price of breathing will become too high. I don't have a clue how they're going to keep a lid on energy prices, but no doubt they will try to do it in an election year. 

Thu, 09/08/2011 - 14:52 | 1647185 redpill
redpill's picture

Translation:  Give us QE on the 21st or we can no longer guarantee your cushy corner office in the Goldman building after you get kicked out as chairman in 2013.

Thu, 09/08/2011 - 15:53 | 1647491 espirit
espirit's picture

So... the real question is whether to "buy the rumor, sell the news" or flip it around.

Heh, best to be in Physical.

Thu, 09/08/2011 - 15:58 | 1647514 redpill
redpill's picture

No QE = gold and Treasuries go up on safe haven plays

QE = gold and stocks go up on inflation plays

Wonder what the safest thing to buy is?

Thu, 09/08/2011 - 14:52 | 1647188 HelluvaEngineer
HelluvaEngineer's picture

If they knew it was coming, think they'd be this obvious about it?

Thu, 09/08/2011 - 14:56 | 1647215 Tsar Pointless
Tsar Pointless's picture

I'll wager their short position in the equity markets, that they would not be, no sirree.

Thu, 09/08/2011 - 14:52 | 1647190 MsCreant
MsCreant's picture

I want the Fed to be run like FIGHT CLUB, not this pussy E-CON-omics club!!!!

Let those bastards duke it out to decide economic policy.

I'll bring pop corn. Hell, I'll bring booze. Really.

Thu, 09/08/2011 - 15:04 | 1647249 DaveyJones
DaveyJones's picture

and to think, other sites charge you for your fanatsies

Thu, 09/08/2011 - 14:59 | 1647207 TruthInSunshine
TruthInSunshine's picture

Election year will NOT suffer inflation exploding and $4 to $5 a gallon gas, which is what more Bernank fiat diarrhea will accomplish.

 

Fade Goldman.

They're certainly fading any "valued clients" (e.g. see Abacus, Timberwolf, Hudson, etc. etc. etc.) who are idiotic enough to take their advice.

Thu, 09/08/2011 - 15:08 | 1647270 Corn1945
Corn1945's picture

I tend to agree. All QE2 did was pump up gas  and food prices. The last thing Obama wants is $7/gallon gas. Unless Bernanke wants to fuck him over. That is also another possibility.

Either they print and gas goes to $7 or they stop printing and the market implodes. No good solutions here because money printing doesn't create wealth.

Thu, 09/08/2011 - 15:12 | 1647287 TruthInSunshine
TruthInSunshine's picture

Not to mention that even INCUMBENT REPUBLICANS in the House & Senate DO NOT want exploding gas-food prices, given the 15% approval rating of CONgress.

Thu, 09/08/2011 - 15:30 | 1647386 Corn1945
Corn1945's picture

Agree. It's increasingly obvious that Bernanke's actions are really making things worse.

He also runs the risk of becoming a major talking point in the 2012 elections. He was already mentioned in last night's "debate". The Republicans will make a lot of noise about the inflation he caused even though they won't do anything about it. The Democrats will have a hard time defending him, his policies clearly haven't worked and the stock market is now imploding. Even the most ardent statist will have difficulty defending this clown.

The last thing he wants is people paying attention to every move he makes. I think that's why all we've seen is jawboning out of him.

He has to balance his desire to prevent bad debts from imploding (and thus prevent a real economic recovery) and the desire to not get booted out on his ass.

Gold, silver, and other commodities will absolutely explode upward if he tries more money printing. $3000 gold will really unsettle people.

Thu, 09/08/2011 - 15:39 | 1647415 Corn1945
Corn1945's picture

Also, what happens if he tries more money printing and the stock market doesn't really move? Then he'll really look like a fucking asshole.

You are printing money, the stock market really isn't going anywhere, commodities are spiraling out of control, and countries are collapsing into revolution left and right. What the fuck are you doing dude?

QE2 produced some gains, but the losses in purchasing power probably outweighed any gains to 401Ks. You've got a real increase in costs today (gas, food, etc) and paper profits paid off in devalued dollars some time down the road.  And remember, most of the stocks are owned by the richest Americans to begin with.

Thu, 09/08/2011 - 18:40 | 1648117 DosZap
DosZap's picture

<Corn1945  >

Well, if they would STOP EXPORTING CRUDE, Our prices would come down..........

Yes, you read it correctly.WE are Exporting OUR crude, as we pay over $3.4/80,per gal.

Now ain't dat some shiuut.

Thu, 09/08/2011 - 23:23 | 1649481 MsCreant
MsCreant's picture

This will happen with food too.

Thu, 09/08/2011 - 14:55 | 1647211 GeneMarchbanks
GeneMarchbanks's picture

Since Goldman are the market makers they will get more easing. Hello $2000.

Thu, 09/08/2011 - 15:00 | 1647234 LawsofPhysics
LawsofPhysics's picture

I wish I experienced this kind of foreplay at home.  Intense stuff.

Thu, 09/08/2011 - 15:01 | 1647236 There is No Spoon
There is No Spoon's picture

talking down inflation is a prerequisite for more easing. Bernanke did just that, so no surprise that the market expects easing, as can be seen in the gold price action today.

Thu, 09/08/2011 - 15:01 | 1647240 Mae Kadoodie
Mae Kadoodie's picture

So, if Ben says stronger growth for the 2nd half and then implements the easing machine 12 days later how does that not give the appearance of a big fat panic?

Thu, 09/08/2011 - 15:02 | 1647241 Ancona
Ancona's picture

C'mon Beelzebernanke.....stimulate me. You know you want to.

Thu, 09/08/2011 - 15:02 | 1647243 DaveyJones
DaveyJones's picture

Goldman's take on Goldman's speech

Thu, 09/08/2011 - 15:02 | 1647244 TradingJoe
TradingJoe's picture

Who the fuck cares about Goldman's wishful thinking!? Seriously!!!! We got more carrot on a stick today and tonight will be the same! There won;t b shit on the 21st and this "market" will tank badly!

Thu, 09/08/2011 - 15:02 | 1647245 Aunty Christ
Aunty Christ's picture

Bottom Line: NO QE3, no compromise on jobs bill, S&P ~1200 is wishful thinking

Thu, 09/08/2011 - 15:18 | 1647336 CrashisOptimistic
CrashisOptimistic's picture

Every penny of stimulus adds to the risk that the debt ceiling would be busted pre Election Day.  300-400 Billion guarantees the fight resumes in September of next year.

No way in hell they will lift that just to spend more money . . . errr, what am I saying.

Thu, 09/08/2011 - 15:03 | 1647246 kito
kito's picture

anybody else getting fedtigued by all of this qe talk?

Thu, 09/08/2011 - 15:11 | 1647281 MsCreant
MsCreant's picture

Fed up.

Thu, 09/08/2011 - 15:55 | 1647495 DaveyJones
DaveyJones's picture

Fed West

Thu, 09/08/2011 - 15:05 | 1647255 Careless Whisper
Careless Whisper's picture

There's a Congress person who actually fought against Glass-Steagall repeal in 1999. The vote was 353-57. Now she's running for US Senate;

http://www.youtube.com/watch?v=tkjldDw2nB0

 

Thu, 09/08/2011 - 15:11 | 1647284 Stax Edwards
Stax Edwards's picture

Is the point here for Goldman to say it is so, and the Fed to not QE so as to discredit the theory that Goldman runs the Fed?  Naaah...

Thu, 09/08/2011 - 15:14 | 1647309 JW n FL
JW n FL's picture

 

 

http://www.youtube.com/watch?v=fiIDiXfu9Gs

Teen mob attacks clerk, robs convenience store

here we go!!

 

Thu, 09/08/2011 - 15:15 | 1647311 DosZap
DosZap's picture

< and will do nothing to dispel market expectations of further easing action at the September FOMC meeting.

 

Nor will he say HE will ease either.

 >

Thu, 09/08/2011 - 15:17 | 1647326 JW n FL
JW n FL's picture

 

 

http://www.youtube.com/watch?v=liY7k9aSMec

#OP Wall Street (Sept 17, 2011)

Thu, 09/08/2011 - 15:25 | 1647361 JW n FL
JW n FL's picture

 

 

New York Finest are home jerking off thinking about how may of you Peace Freaks they are going to get to abuse!!

http://www.youtube.com/watch?v=QWTzX5b1JmA

Protestors in New York Gettin some LOVE from the FINEST that New York has to offer! LOL!!

http://www.youtube.com/watch?v=FoaEO6qcRX4&feature=related

dont worry!

when you idiots are tired of being abused and having your Rights forceably taken away from you..

when you are ready to defend your rights with the same amount of force used to take them.. then we will have some real change.. but not before then.

 

Thu, 09/08/2011 - 15:17 | 1647328 PartysOver
PartysOver's picture

Beam me up another kegger Scottie, the entitlement drunks are getting angry!

Thu, 09/08/2011 - 15:19 | 1647337 Days Numbered 2012
Days Numbered 2012's picture

Gold's Take: UP 3% so far...

Thu, 09/08/2011 - 15:26 | 1647365 adr
adr's picture

Inflation with be subdued and the transitory factors that led to high consumer prices will moderate.

NO THEY WON'T YOU STUPID FUCK!!!!!

Unless commodity prices DEFLATE the US consumer is dead.

Consumer spending should have increased once the recession was declared to be over.

WE HAVE NO MONEY YOU STUPID FUCK BECAUSE YOU CAUSED EVERYTHING TO TRIPLE IN PRICE!!!

Nobody wants to take the jobs that are available because they don't pay enough money to live on and you are better off on welfare.

If I lose my $65k a year job the best I can hope for is $35k. My exact job  at another company was just advertised for $35k. I CAN'T EVEN KEEP MY $130k HOME ON $35K!!!!!

I could if natural gas, gasoline, healthcare, and food didn't triple over the past couple years.

Yes let's create a whole bunch of minimum wage jobs, yeah that will fix the country. OH YEAH AND SMALL BUSINESS IS DEAD BECAUSE THE ONLY PLACE LEFT TO SELL TO ARE THE BIG BOX RETAILERS WHO DON'T LET YOU MAKE ANY PROFIT!!!!!!

Or maybe everyone can just open a restaurant and go out of business because of massive inflation in food and nobody left who can afford to eat out.

 

OH AND CONSUMER CREDIT INCREASED BY THE LARGEST AMOUNT IN YEARS BECAUSE STUDENT LOANS ARE INCLUDED IN THE CREDIT NUMBERS AND COLLEGE JUST STARTED UP AND MOST STUDENTS SIGN THEIR LOAN DOCUMENTS IN JULY YOU STUPID FUCKS ON CNBC!!!!! I MEAN YOU STUPID FUCKS, HOW CAN YOU NOT EVEN SEE THE SIMPELST THINGS  YOU STUPID STUPID FUCKS!!!!!!!!!!!

I can't take the stupidity anymore. I really can't take it. Watching Bernanke again lie though his stupid fuck teeth again is just it. By the way he says he expects the dollar to remain the world's reserve currency for a long time. THAT MEANS IT IS OVER AND THE DOLLAR WILL BE DROPPED BEFORE THE END OF THE YEAR.

 

Thu, 09/08/2011 - 15:31 | 1647387 gangland
gangland's picture

bernanke expects economic activity to pickup (not employment and he knows it) in the second half and he is puzzled as to why households are not spending. fucking moron.

Thu, 09/08/2011 - 15:45 | 1647429 sbenard
sbenard's picture

What they really mean is: "Market DEMANDS easing action..." and at everyone else' expense! They're saying, "We want more inflation, or we're going to soil ourselves and throw a tantrum and cast ourselves off a cliff"! They're trying to hold all of society hostage to their demands. I say, "Go ahead, Wall Street, make my day!" The kleptocracy continues!

QE is welfare for Wall St!

Thu, 09/08/2011 - 17:12 | 1647813 The Heart
The Heart's picture

Just started!

Tribute Memorial to the Liberty with the crew on right NOW at:

http://republicbroadcasting.org/

LISTEN NOW LIVE!

PASS THIS ON PLEASE.

Thu, 09/08/2011 - 19:16 | 1648253 Downtoolong
Downtoolong's picture

The most powerful thing the Fed could do right now (just once) to justify why it even exists is to show us  that market planners like Goldman don’t always get what they expect. In my dreams, I would love to see the look on the faces of Goldmans traders as Bernanke announces at the FOMC meeting he is reversing QE1&2 because it didn’t work, and he wants to apply the stimulus in a different direction. That’s another way of me saying I would like to buy into the stock market at DOW 4000 after it reverts to its true fair value. Go ahead laugh, object, throw hot water on the idea. But, consider this. I bet if Becky Quick’s favorite business icon/hero/fantasy father figure/bathtub playmate Warren Buffett were in the business of investing in broad market indices (instead of desperate and near bankrupt companies like BAC) he would never pay a tick above this level either. 

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