Here Comes The Hilsenrath Leak: "Fed Considers More Action"

Tyler Durden's picture

Three months ago, just when things looked like they were about to turn south, the Fed's trusty mouthpiece, Jon Hilsenrath, made it clear that the market can stop falling as the Fed was "considering" sterilized QE, or more Twist, something we explained later would be impossible in the current format as the Fed would run out of sub 3 Year paper by the end of August. It did however halt the drop in stocks for a month or two until Europe became permanently unfixed. Hilsenrath then cralwed back into his WSJ cubicle. Until today: two weeks before the all critical June 20 FOMC meeting, the faithful Fed scribe has been charged with his latest leak commission: "Fed Considers More Action Amid New Recovery Doubts." And as it has been leaked (now that people have actually done the appropriate math), so it shall be.

From the WSJ:

Disappointing U.S. economic data, new strains in financial markets and deepening worries about Europe's fiscal crisis have prompted a shift at the Federal Reserve, putting back on the table the possibility of action to spur the recovery.


Such action seemed highly unlikely at the central bank's April meeting, when forecasts for growth and employment were brightening. At their policy meeting this month, Fed officials will weigh whether the U.S. economic outlook is deteriorating enough to justify new measures to boost growth, according to interviews and Fed speeches.


The Fed's next meeting, June 19 and 20, could be too soon for conclusive decisions. Fed policy makers have many unanswered questions and have had trouble forming a consensus in the past. Top Fed officials have said that they would support new measures if they became convinced the U.S. wasn't making progress on bringing down unemployment. Recent disappointing employment reports have raised this possibility, but the data might be a temporary blip. Moreover, the Fed's options for more easing are sure to stir internal resistance at the central bank if they are considered.


Their options include doing nothing and continuing to assess the economic outlook—or more strongly signaling a willingness to act later if the outlook more clearly worsens. Fed policy makers could take a small precautionary measure, like extending for a short period its "Operation Twist" program—in which the Fed is selling short-term securities and using the proceeds to buy long-term securities. Or, policy makers could take bolder action such as launching another large round of bond purchases if they become convinced of a significant slowdown.

Another question: does Twist end in 25 days, or will the market have a violent revulsion to a world without constant central-planner artificial "flow" creation (because as first noted here months ago, only Nobel prize-winning economists still think "stock" is even remotely relevant).

Mr. Bernanke must decide whether to let the program end. The Fed has enough short-term securities left to extend it for a few months [ZH: good to see that Hilsenrath is finally doing the math that refuted his own articles 3 months ago] as a precaution while it watches how the economy develops. If officials become more convinced about a growth slowdown they could expand the Twist program or launch another round of securities purchases—an approach known as quantitative easing—to try to boost growth.

But the most important question: with the 10 Year already at the idiotic 1.50% level, does anyone seriously believe that more risk taking will be provoked by pushing yields to 1.40%, or 1.30%? Or how about 0.00%? In fact, why doesn't Bernanke just pull a Bank of Japan, and stop beating around the bush, instead buying up all the SPY, and REITs he can find. One ETF he doesn't have to buy will be GLD: that one will go up on its own. Very, very fast.

Finally, as Zero Hedge explained patiently last night, while the economists, pundits, and sellsiders all have their self-serving theories, the bond market, at least for now, has spoken, and sees not more LSAP but a simple expansion of Twist from 0-3 to 0-4 year maturity sales: an outcome which to the market will be the worst of all worlds.

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NotApplicable's picture

I thought it was getting a little too quiet lately.

If only Europe had a Hilsenrath of their own...

HelluvaEngineer's picture

Fuck you Bernanke.  I'm long euro, GDXJ to offset my shorts.

fightthepower's picture

I say this from the bottom of my heart, Fuck You Bernanke!

Troll Magnet's picture

does this mean i should buy facefuck fuckface facebook stocks?

Sakka's picture

I think that Mr. Chapman was a great American.  I hope anyone fighting cancer will consider Cannabis extract, e.g. "Phoenix Tears".



Thomas's picture

I think the mistaken notion is that QE is to push down rates. As I see it, QE is to monetize trash. In this case, it is likely to be Eurotrash. I think it's treasonous, but what do I know.

Emund Burke, writing two centuries ago, accurately predicted the French Revolution (in its infancy at the time of his writing) would turn "murderous". Good call, Eddie. He also hated intellectuals (read: Bernanke) because they meddled with the complex interactions between complex institutions without understanding them at all. He was the father of the Law of Unintended Consequences, and he seemed to lay a lot of the foundations for Hayek's "Fatal Conceipt". 

Go Tribe's picture

Very good point. As long as the banks are holding toxics, the Fed's business isn't done and we don't have time to wait for Merkel and whoever is running Spain to agree on anything.

barliman's picture


QE is intended by Bernanke and his ilk to put a hard deck under the markets via the banks.

Benny has the Hah-vahd conceit of believing he is smarter than anyone else.

Anyone. Anytime. Ever.

Hubris is always fatal.  In his case, he may actually end up being tried for treason if he stays on the path he has set out for himself.

I would enjoy his trial ... immensely.


The Big Ching-aso's picture



Ok.  So he does QE.  Then crude counteracts that in spades.  Looks 2 me like the middle-class still gets screwed but WS makes more money.  Sounds like a decent plan for a better future for WS and a more phucked past for the middle-class taking it once again up the ass.    Go Ben.

amadeusb4's picture

OK, let's take this further. If oil shoots up, then prices at the pump shoot up and this makes Obama's reelection campaign that much harder. Would Bernanke take his chances with Romney or prefer Obama? My guess is that given that Romney's election is a long shot, Ben is going to stick with the current boss and hence no QE until after election.

The Big Ching-aso's picture



I think that makes a lot of sense.   But again, remember who we're talking about here regarding good cents.

j0nx's picture

Long shot?? I mean I don't really like the guy either but after the disaster that Oblamebush has presided over for the past 3+ years, Bush himself could run again and get reelected over Obama. I mean you could put a hamster on the ballot and they would beat Obama at this point. And things will ONLY get worse and MUCH worse at that for the next 5 months. Obama really has no chance at another term and has pretty much sullied the chances of another black man ever taking the office of President again in the near future. I think that's the worst part of all of this is that Obama has reenforced the stereotype that blacks can't lead a nation. There are plenty of other incredible choices we could have had as our first black President and we get saddled with this dipshit instead.

LongBalls's picture

I made more money listening to Bob than anyone or anything else. Bob brought upon my awakening. Thank you MR. CHAPMAN. My God Bless your soul. I shall seek you out in the great beyond to give you my thanks for your care.

The Big Ching-aso's picture



You're a little premature but I'm sure he looks forward to you seeking him out relentlessly in the afterlife.

Gringo Viejo's picture

An American Patriot. Thanks Bob!

rqb1's picture

His blog said he is still with us, said that it was a soccer player with the same name who passed

bigkahuna's picture

Bob Chapman is alive.

The Big Ching-aso's picture



Thank God.     I just found out so is Tina Delgado.   She's alive, alive.

CPL's picture

OIL CHARGE!!!!!! This time analysts can set their watches to how fast it jumps right over 100 and makes a b line to well past 140.

Michael's picture

I must have complete and total Annihilation of the whole fucking financial structure on the entire fucking planet.

You go right ahead Mr Bernanke and do all the QE3 I guaranteed to happen and whatever you need to do to finish stretching the rubber band just a little bit further. 

Don't listen to these bozos on this site Ben, just follow in my hero's and your predecessors footsteps Alan Greenspan and finish destroying what may be left of the place by doing what you do best. 



The Big Ching-aso's picture



I'm sensing Ben and you go way back and have fond childhood memories growing up together. 

FL_Conservative's picture

And his little mouthpiece (Hilsenrath) too.

franzpick's picture

Ben-Dover: when the SHTF, keep your soap on a rope...

Eireann go Brach's picture

There will be a spare lamppost and plenty of rope available for him too!

phungus_mungus's picture

Full on rock hard market woodie in 3, 2, 1... 

boogerbently's picture


It may be a good time to QE, now. QE dollar destruction offset by EUrodive dollar strengthening.

I STILL need it adequately explained to me why the freshly printed bucks go to GS, JPM, MS,......

but WE have to pay them back !

Caviar Emptor's picture

Told ya, told ya, told ya! 

Despite the protests from the aging whore that she "never sleeps with men on the first date", all global central banks, governments, and their cronies are always ready. willing and able to print to bail themselves out and make sure that you repay your debts to them

Rich Bagg's picture

Shalom is a good man.  If it weren't for him, our financial system would have melted down long ago and we would have had a total breakdown of society.  He's holding the system together while waiting for organic growth to resume.  You don't get to teach at Princeton if you're a dumbass.  Shalom is smart and his moneychanging roots serve him well.



Lore's picture

And colorless green ideas sleep furiously.

ElvisDog's picture

while waiting for organic growth to resume

Hah, you are one funny he/she, Rich Bagg.

IndicaTive's picture

You're slacking off. Shouldn't each premise be a separate post?  Preceding a few bullshit cliche's drawing a lame-ass troll conclusion?

Right-on Left-off's picture

Hasn't anybody noticed what cash & carry gold and silver are going??

Lift-off has occurred!

... and while you are at it ... take a gander at the Fx.

Gringo Viejo's picture

Off Topic: As per Drudge, the communists are losing their recall attempt in Wisconsin by a margin of 58% to 41% with 6% of votes tallied. This despite a voter turnout of 119% in Madison. PUBLIC SECTOR UNIONS ARE A CONTRADICTION IN TERMS! IF YOU WANT TO LIVE OFF THE TAXPAYER AND THE MONEY'S NOT ENOUGH, GO OUT IN THE PRIVATE SECTOR AND COMPETE! FUCK THESE COMMUNISTS!

Debt-Is-Not-Money's picture

Lucy, Charlie Brown and the football !

UBIGDummy's picture

Hilsenwrath says "Here have a paper carrot you stock donkeys"

techperson's picture

Bernanke only has 18 months left on his term and doesn't seem to want another one. He doesn't care who's President.

The Monkey's picture

I would guess there is some lamenting that the bears didn't really bite.  Risk on from these levels - that would be gutsy to say the least.

NotApplicable's picture

Gutsy? Nah, they're merely front-running the ZIRP Express (or sitting on the sidelines waiting for Benron's call).

Only 155 bp left to go!

The Monkey's picture

Let's quit with the bullshit.

Bernake should offer some forecasts for secuity prices in conjunction with their effort to improve policy communications. For instance, "we will pursue expansive operations until the Russell 5000 is @ _____ AND copper is @ _____ AND CC1 credit has ____ spread to the 10 year treasury."


Haven't they FUBAR'ED  the world enough already?

NotApplicable's picture

Not as long as they've got potential FUBAR remaining. (think activation energy)

Crab Cake's picture

Not as long as the concepts of constitutionality, national sovereignty, personal freedom, and lasseiz fair free markets still exist has the fed done its "job."

CClarity's picture

Unless the Fed buys up sovereign European periphery debt, lower rates in the US won't help anyone.

narnia's picture

They aren't managing the yield curve or fx. They are genuinely concerned about deflation & they should be.

Reese Bobby's picture

Our Central Planners have convinced you deflation is the boogeyman?  That is sad.