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What To Expect From Bernanke At J-Hole

Tyler Durden's picture


Expectations for tomorrow's J-Hole speech by the venerable Ben Bernanke vary from the mundane "things-we-can-still-do; monitoring-situation" to the exuberant "we'll-print-our-way-out-of-this-mess-no-matter-what-and-I've-got-your-back-for-anything-more-than-a-1%-drop-in-the-Russell". We suspect, like Morgan Stanley's Vince Reinhart that a lot of people are going to be grossly disappointed  as the FOMC (C for Committee) meeting is so close and the election being just around the corner means playing-down any miracle-making. Instead we suspect it will be more of the same - disappointment in economic performance, could do better, closely monitoring, Fed-has-tools; i.e. a replay of most of his recent speeches in tone. Reinhart does see some room for surprise though - especially on conditional policy rules (and the potential problems with over-reaching their mandate).


Vincent Reinhart, Morgan Stanley: The Message from the Mountains

We have had low expectations for significant news from Chairman Bernanke’s Jackson Hole address for some time for two reasons.

  • First, he respects that the Federal Open Market Committee is a committee.  That is, monetary policy actions are group decisions and it is inappropriate to front run the outcome of a democratic process. 
  • Second, he wants to keep a relatively low profile during an election year when the Federal Reserve is already a hot-button campaign issue.  His speeches and testimonies over the past few months—even his semi-annual report on monetary policy—have been short, factual, and uneventful.

What does he have to do?  He has to convey that the Fed has been disappointed in the economy’s performance, that policymakers are inclined to provide additional accommodation soon unless there is a significant and sustained improvement, and that they will closely monitor the situation.  Essentially, all he needs to do is repeat portions of the statement and minutes from the July-August meeting.  Along the way, he will highlight that it is a beautiful venue for a conference, that they are about to hear interesting papers, and that many fiscal challenge remain unanswered.

The main possibility for surprise is if he addresses the ongoing work within the Fed on conditional policy rules.  The last set of minutes referred several times to discussions of rules and more open-end policy commitments.  Up to now, the Fed has been using its policy instruments in an unconditional way, in that it announces a program of fixed duration and fixed amount.  Most academic work, as will be discussed in the formal program at Jackson Hole, suggests that a rule linking the policy instrument to economic outcomes or the outlook performs better.  

The idea is that the Fed could agree, for instance, to keep the funds rate target at zero as long as they have an economic forecast that is short of their missionThe problem is that the mission at the heart of Fed policy-making is ambiguous.  In the Federal Reserve Act, the Congress tells the Fed to foster maximum employment and stable prices but is silent on how to weigh deviations from the two objectives or how quickly those deviations should be eliminated.  The monetary policymakers at the Fed are a diverse group of people who disagree on how to fill this silence.  If they can come to terms with this issue, then they can offer more open-ended assurance to financial market participants and the public at large. 

Chairman Bernanke is unlikely to offer a Solomonic solution, but his speech would be more interesting if he relayed where they are in the process.


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Thu, 08/30/2012 - 19:22 | 2750993 Atomizer
Atomizer's picture


Thu, 08/30/2012 - 20:17 | 2751124 Precious
Precious's picture

Speech?  Irrelevant.  

Bernanke is simply checking in with the puppemasters for further instructions on Obama, who is unelectable without them.

On the same trip, the puppetmasters will sign and mail their Wyoming tax returns.

Thu, 08/30/2012 - 20:19 | 2751136 Slack Jack
Slack Jack's picture

Bernanke will have to deal with this;


China and Germany will no longer do business in USD, Euros and Yuan preferred;

Thu, 08/30/2012 - 21:14 | 2751244 tahoebumsmith
tahoebumsmith's picture

Say it isn't soooooo. There have been many of us pointing out the real crisis for some time now. The games have begun, for those of you doomers out there waiting for the breaking point? SNAP!


Thu, 08/30/2012 - 22:17 | 2751350 stocktivity
stocktivity's picture

The A-Hole from J-Hole

Thu, 08/30/2012 - 23:32 | 2751466 AGuy
AGuy's picture

Ben is going to make a big announcement: "A little blue pill" that will correct economic disfunctionally: the new pill is called e-congra.

[Secret] Shh! Actually it's just a placebo, but the public won't know!

[e-congra side affects] May cause the value of your currency to devalve. May cause stagflation, and cause swelling of the federal gov't. Use caution before starting a daily e-congra regimen,  and discuss this with non-keysian economist first.

Fri, 08/31/2012 - 02:40 | 2751666 Kiwi Pete
Kiwi Pete's picture

J-Lo's hole?

Fri, 08/31/2012 - 03:16 | 2751688 JHole2012
JHole2012's picture


Fri, 08/31/2012 - 05:50 | 2751810 Comay Mierda
Comay Mierda's picture


China and Germany will no longer do business in USD, Euros and Yuan preferred;

forget about QE, this story and others like it are the reason behind gold's continued strength

Thu, 08/30/2012 - 20:45 | 2751172 Atomizer
Atomizer's picture

It's amazing! It's extraordinary! It's stupendous! Yes folks, it's the Jackson Hole Circus..


Step right up, step right up, times a wastin’ folks. Tell ya what I’m gonna do! You don’t hafta knock’em off. Tip’em flat. Four flat gets you choice. One win’s all it takes. Biggest prizes on the Jackson Hole carny conference circuit..

Thu, 08/30/2012 - 21:53 | 2751309 goldfish1
goldfish1's picture

The A-Hole at J-Hole.

Thu, 08/30/2012 - 21:57 | 2751313 bb5
bb5's picture

Good one!

Fri, 08/31/2012 - 04:52 | 2751756 StychoKiller
StychoKiller's picture

"Hey you, with the face, step right this way..." -- Cyclone Pinball Machine

Fri, 08/31/2012 - 00:19 | 2751530 PlausibleDenial
PlausibleDenial's picture

It is irrelevant.  In fact, it so irrelevant that I am boycotting the whole fucking deal.  I am going to get up and go to the beach take a stroll get some fucking bad ass breakfast with every lipitor piece of meat available.  Then, I am going to do a pool day with Margs, 420, and my girlfriend half ass naked.  If I have time, I am going to install the SSAR on my M4.

Check back in on Monday night.  Have a great weekend.



Thu, 08/30/2012 - 20:22 | 2751142 Schmuck Raker
Schmuck Raker's picture


Thu, 08/30/2012 - 19:24 | 2751000 machineh
machineh's picture

What if the Bernank gave a speech and nobody came?

Non-news from a nonentity common counterfeiter ...

Thu, 08/30/2012 - 20:12 | 2751121 THECOMINGDEPRESSION

Since it will be the same speech as last time..It has now been cancelled. Reruns of last episode is on channel 16.

Thu, 08/30/2012 - 21:04 | 2751221 Antifaschistische
Antifaschistische's picture


My hypothesis is that the OB ADMIN has spent so much time/influence hiding true economic statistics to keep voter sentiment high, that the chairsatan can't act.   Satan knows that if the true stats were being publicized that he's have the green light....but then, POTUS would lose his job.   So to keep POTUS on his thrown, the spin is on like never before...and Satan is sterilized.

Thu, 08/30/2012 - 19:25 | 2751004 Bay of Pigs
Bay of Pigs's picture

All Hail Uncle Shalom the Bearded Clam...

ZIRP FOREVER! We're doing it!

Fri, 08/31/2012 - 05:44 | 2751800 tocointhephrase
tocointhephrase's picture




Thu, 08/30/2012 - 19:30 | 2751006 lewy14
lewy14's picture

Any intervention sufficient to forstall asset deflation stokes commodity inflation. Game over QED.

Thu, 08/30/2012 - 19:26 | 2751007 azzhatter
azzhatter's picture

The A-hole from J-Hole. Is Liesman blowing him tonite

Thu, 08/30/2012 - 19:35 | 2751036 Dr Benway
Dr Benway's picture

And they are deep in the K-hole of dissassociative Keynesianism

Thu, 08/30/2012 - 19:48 | 2751066 Vet4RonPaul
Vet4RonPaul's picture

Yea, Liesman cleans up after WSJ Jon Hackinonit

Thu, 08/30/2012 - 19:53 | 2751078 LetThemEatRand
LetThemEatRand's picture

"Is Liesman blowing him tonite"

Liesman once had a full head of hair, but he got tired of constantly walking around with Bernanke spooge all over it so he shaved it off and left Ben a clean landing strip.

Thu, 08/30/2012 - 20:19 | 2751134 yogibear
yogibear's picture

It did look like Liesman had his kneepads on. 

Fri, 08/31/2012 - 04:53 | 2751761 StychoKiller
StychoKiller's picture

Probably yer most coherent post ever!

Thu, 08/30/2012 - 19:28 | 2751010 ar01
ar01's picture

So if BB doesn't print, is that just a future indicator of QE3, meaning the market will remain 'priced in'? 

Thu, 08/30/2012 - 20:19 | 2751137 max2205
max2205's picture

he wants to keep a relatively low profile during an election year '

What a joke

Thu, 08/30/2012 - 19:30 | 2751014 XitSam
XitSam's picture

"He has to convey that the Fed has been disappointed in the economy’s performance, and since the Federal Reserve has no idea why the economy is broken or what to do, the Federal Reserve should be abolished."

Fri, 08/31/2012 - 04:54 | 2751764 StychoKiller
StychoKiller's picture

Man, you high on somethin'! :>D

Thu, 08/30/2012 - 19:29 | 2751018 zebrasquid
zebrasquid's picture


Thu, 08/30/2012 - 19:31 | 2751019 vast-dom
vast-dom's picture

" He has to convey that the Fed has been disappointed in the economy’s performance" but the MOTHERFUCKING S$P is at ALL TIME MOTHERFUCKING HIGHS! So it follows you are NOT SATISFIED WITH THE PONZI, BUT YOU MS, GS, JPM DOUCHEBAGS do REALIZE that even in a PONZI or especially precisely because it is a fraudulent counterfeiting system, there is a definite definitive PONZI ENDGAME! And more so, you FUCKING CAN'T HAVE AN ECONOMY EXCLUSIVELY PREDICATED ON QE!!! SORRY YOU CAN'T!!! IT IS UNNATURAL UNGODLY AND PERVERTS EVERYTHING ON THiS STINKING EARTH! 


Someone please print this and shove it up Bernanks J-Hole!

Thu, 08/30/2012 - 19:48 | 2751067 poor fella
poor fella's picture

Wrap it nicely in Fed script and he'll put it in his man-Jyna-Hole himself, he loves the stuff so much. 


Thu, 08/30/2012 - 19:59 | 2751094 chump666
chump666's picture


Thu, 08/30/2012 - 20:42 | 2751174 max2205
max2205's picture

Stfu, congress has more front running to do

Thu, 08/30/2012 - 19:31 | 2751025 reader2010
reader2010's picture

What a great picuture. looks like a guilty motherf**ker right there.

Thu, 08/30/2012 - 20:37 | 2751033 toomanyfakecons...
toomanyfakeconservatives's picture

Agreed... guilty of pissing on the Constitution. After the MASS ARRESTS occur, the trials will be speedy and public...

Thu, 08/30/2012 - 19:31 | 2751026 nmewn
nmewn's picture

Federal Reserve Notes.

Print my bitch, its all you have.

Thu, 08/30/2012 - 19:36 | 2751035 silverserfer
silverserfer's picture

fuck the FED and what they do or dont do or say. Invest in 90% silver coinage and ignore the bullshit. Regardless of what they do you will preserve your families wealth. Get back to the old school of savers. Quit trying to make a quick easy buck investing. This market is booby-trapped.  


Thu, 08/30/2012 - 19:36 | 2751037 economicfreefall
economicfreefall's picture
It feels like Jackson Hole is set up for disappointment to drive the metals down one last time before launching QE3 Sept. 13.

"Gold was trapped in a tight range on Thursday ahead of a speech from Federal Reserve Chairman Ben Bernanke on Friday that could stoke expectations for a third round of quantitative easing to stimulate the U.S. economy.

But gold is also vulnerable to a selloff if the address turns out to be a disappointment after the U.S. economy fared slightly better than initially thought in the second quarter and the Fed Beige Book report showed the economy continued to grow gradually in July and early August."

My bet is that gold will touch $1620 by early next week and then climb steadily from there until it goes crazy mid September :)

Thu, 08/30/2012 - 22:35 | 2751376 HardAssets
HardAssets's picture


Opportunity coming tomorrow for PMs

Fri, 08/31/2012 - 05:47 | 2751807 tocointhephrase
tocointhephrase's picture

Stack em high!

Thu, 08/30/2012 - 19:38 | 2751043 SheepDog-One
SheepDog-One's picture

They forgot the devil horns and goatee on the Bernank picture.

P.S.- Fuck off Margin Stanley 

Thu, 08/30/2012 - 19:44 | 2751057 The Alarmist
The Alarmist's picture

One word: Disappointment.

Fri, 08/31/2012 - 00:41 | 2751552 The Shootist
The Shootist's picture

Dissapointments are actually positve for wall st. Everything is really, that's why they're on so many meds like Cramer.

Thu, 08/30/2012 - 19:46 | 2751062 buzzsaw99
buzzsaw99's picture

venerable bernank? venal bernank yes, venerable, not so much.

Thu, 08/30/2012 - 19:47 | 2751065 asteroids
asteroids's picture

Please Ben: Make a neutral comment about the weather and SIT DOWN!

Thu, 08/30/2012 - 19:50 | 2751072 buzzsaw99
buzzsaw99's picture

ben you commie bastard!

Thu, 08/30/2012 - 19:50 | 2751074 flaunt
flaunt's picture

Zerohedge?  More like Zerohope.  

This website is best taken in small sips lest you decide to toss yourself off the balcony.


Thu, 08/30/2012 - 20:08 | 2751107 El
El's picture

Oh, stop being so melodramatic.

Thu, 08/30/2012 - 22:38 | 2751379 HardAssets
HardAssets's picture

We mainly come here for the ads with t-shirt babes

Thu, 08/30/2012 - 23:26 | 2751458 ghengis86
ghengis86's picture

Wait, you mean to tell me those are chicks wearing the Snorg shirts?! I coulda swore "meh" was a dude...

Thu, 08/30/2012 - 22:51 | 2751399 BigDuke6
BigDuke6's picture

OK, i'll be positive for ya.

Bernanke is amazing!!

He's printed enough money to give everyone on the planet a 40'' plasma screen...

and gold is still only at $1600.

Think on it.

Thu, 08/30/2012 - 23:31 | 2751463 pan
pan's picture

This is no time for "the power of positive thinking".

Fri, 08/31/2012 - 05:00 | 2751768 StychoKiller
StychoKiller's picture

If you can't laugh, you'd have to cry!  So laugh, already! :>D

Thu, 08/30/2012 - 19:52 | 2751077 e-man
e-man's picture

I say he will renew the Gold Confiscation Order of 1933.  Surprise!  /sarc

Thu, 08/30/2012 - 19:55 | 2751084 Hedgetard55
Hedgetard55's picture

Ben will have a fatal heart attack half way through his speech.

Thu, 08/30/2012 - 19:56 | 2751086 jomama
jomama's picture

what did you call me?

Thu, 08/30/2012 - 19:56 | 2751088 NemoDeNovo
NemoDeNovo's picture

"What to expect from the Bernak @ J-Hole?"


......a Hand job?

Thu, 08/30/2012 - 19:56 | 2751089 BailoutBandit
BailoutBandit's picture

What type of fart do you expect from Bernanke? I'm long SBD.

Thu, 08/30/2012 - 19:58 | 2751090 Yen Cross
Yen Cross's picture

  An " articulate rendition"  of " I told you so"...

Fri, 08/31/2012 - 04:22 | 2751732 slewie the pi-rat
slewie the pi-rat's picture

and right on cue

they predict the FED will SAY it doesn't want to be the center of attention?  how weak is that bullshit?

the benzelbub does not suffer from premature fibrillation of credt

we know him well,  but not for his feints of bashfulness

this is his day;  he's gonna breathe on everyone and the markets will all close at VWAP

and that will be the end of that!

Fri, 08/31/2012 - 05:03 | 2751773 StychoKiller
StychoKiller's picture

He could always say:  "We've decided to raise interest rates in order to get Congress and the Senate to get off their dead @sses and do what they were elected to do, namely, make some hard decisions and cut some Govt spending."  Wouldn't that give everyone that "Deer in the headlights" look?  (Sorry Mescaline flashback...)

Fri, 08/31/2012 - 05:25 | 2751789 Yen Cross
Yen Cross's picture

  i catch every (pip) Slewie.  I submit to "GOD


                                                        Slewie, you aren't like me. Some day I'll Marry. 

Thu, 08/30/2012 - 20:02 | 2751101 disabledvet
disabledvet's picture

sorry 'bout the outburst the other day folks. can't stand all the bailout nation stuff while the soldiers are still on the battlefield dying. to say "that is money they need"...with a full accounting of i think the understatement of all time for we poor 'mericans. Needless to say the 'merican's ain't doing so well by this war either. There is much to be said the war is being used a pretext to steal on the grandest of scales right now...i have said i love this President of ours...and while this is not to say i'm a supporter i truly believe once either of these both emminently qualified men assumes office next year "truly profound change is coming." i know it sounds hokey but my personal view is that democratic governments are going to be toppled in Europe...possibly quite soon given the rapidity of the collapse going on...and i think China is on the verge of a "collapse of the center" as well. given what we already know about the "so called Arab Spring" (in actuality an Arab revolt) my personal view is that the Fed Chairman will simply stay the course "and let the local yokels sleep in the bed that they've made." It might be too alarmist to predict tanks in the streets of the USA..but we have never experienced the possibility of State and Municipal bankruptcies on the scale it sure seems to me we're looking at. I see the Chairman "at the ready to assist Federal authorities in case of emergency." Nothing more...nothing less either. "Bailout nation" is running its inevitable course: money for New York City...and unless you have a large industrial base (South Carolina), lots of oil (Texas, Oklahoma, Alabama, North Dakota, Alaska) or are front and center in tech (North Carolina, West Coast)...i really don't see how you can get out of the way of this thing.

Thu, 08/30/2012 - 21:48 | 2751304 SwingForce
SwingForce's picture

Money is disappearing into banks, money is disappearing into military too just as fast. Only problem is, banksterz aren't losing fingers and toes, or dying. I hope military personel wake up.

Thu, 08/30/2012 - 20:08 | 2751110 Keith Piccirillo
Keith Piccirillo's picture

Ben don't offer scoops Tyler.

You're looking for a tailor made suit in an off the rack kind of world.

Thu, 08/30/2012 - 20:12 | 2751120 random shots
random shots's picture

Should have just read Hilsenrath's twitter account instead of being nickel and dimed by MS to be Bernanke's hype man.  Where is Flava Flav when you need hiM?

Thu, 08/30/2012 - 20:14 | 2751125 Dr. Engali
Dr. Engali's picture

Blah blah blah.... slow growth. . Blah blah blah..... Inflation transitory..... Blah blah .... The fed has tools remaining .. Blah.... The fed stands ready...... Blah

Thu, 08/30/2012 - 20:21 | 2751140 fonzannoon
fonzannoon's picture

Doc this is where you and me totally differ. I have the same message but I see him bailing on the blah blah this time and going with rabble rabble.

Thu, 08/30/2012 - 22:57 | 2751410 Osmium
Osmium's picture

Or maybe Yadda, Yadda?

Thu, 08/30/2012 - 20:15 | 2751127 FranSix
FranSix's picture

Is there a place called the V-hole?  Never mind.  Just a rhetorical question to lighten up your day! Carry on as usual!

Thu, 08/30/2012 - 20:19 | 2751133 Meesohaawnee
Meesohaawnee's picture

yea. becky quick's snatch

Thu, 08/30/2012 - 20:18 | 2751130 Meesohaawnee
Meesohaawnee's picture

" He has to convey that the Fed has been disappointed in the economy’s performance,"  what he wont convey is that lack of performance (not the one where fleecman has hot jizz on ben's head) is directly due the entity making wonder wonder land that they are trying to fix it. Ben be dissapointed at Ben! The more you print the more you fuck the middle class the worse it will be. Print = 120 crude = bye bye obamma!!

Thu, 08/30/2012 - 20:17 | 2751132 sschu
sschu's picture

It seems Bennie etal is in a real box with politics the way they are heading.  Whatever your persuasion and despite what they can really accomplish (maybe nothing), Christie and Ryan have nailed the fiscal thing pretty hard the last two nights.  If the Rominator comes out swinging and says the same 20% of GDP is the federal government spending limit and we are going to fix this thing (entitlements, etc), then Bennie has to decide what team he is on.

The Rominator is already saying Bennie is history if he gets elected, so my guess is Bennie hits it right down the middle and makes few if any real commitments pending the polls after the Demo convention.  The most important objective for the central banker is to remain the central banker and find a way to subvert those who have the political power.  Bennie is on notice, and the new guys on the block have the power ... at least for now.



Thu, 08/30/2012 - 22:25 | 2751266 sbfeibish
sbfeibish's picture

Made a mistake here.  No comment.

Thu, 08/30/2012 - 20:24 | 2751145 yogibear
yogibear's picture

Benny Bernanke will eventually do what Keynesian zombies do when their in trouble, print. All the excess cash has to go somewhere so it goes into stocks and commodities. 

Watch food prices resulting from the drought go higher along with Bernanke's printing.


Thu, 08/30/2012 - 21:21 | 2751255 titty sprinkles
titty sprinkles's picture

Food price increase projections I've seen seem to run around 3 - 4%.  Seems low to me, all things considered.  Anybody with insight on the matter care to share?

Thu, 08/30/2012 - 23:04 | 2751418 Osmium
Osmium's picture

sorry, too busy watching your avatar smack it's ass.

Fri, 08/31/2012 - 00:01 | 2751508 AlaricBalth
AlaricBalth's picture

This may help. The food price scenario, looking forward does not look good.

Fri, 08/31/2012 - 01:46 | 2751615 titty sprinkles
titty sprinkles's picture

aaahhhh... with chart porn and footnotes (slow clap)

thank you, good sir

Thu, 08/30/2012 - 20:36 | 2751153 Zero Govt
Zero Govt's picture

Vincent Reinhart of Morgan Stanley is going to win the prize for writing the most inane garbage in 2012

cannot believe any adult thinks this crap is passable by either private bankers or a stinking monopoly private cartel (ie. the Fed) for public consumption it's so obviously total drivel

Mr Reinhart, your audience was not born yesterday, you really must try alot fucking harder to pull the wool over their eyes that Bernanke is anything but a dullard one trick pony with only one thing to do all year, print or not to print. Is Morgan Stanley an international bank, seriously?!!

Thu, 08/30/2012 - 20:28 | 2751155 DavosSherman
DavosSherman's picture

A-holes @ J-hole!

Thu, 08/30/2012 - 20:36 | 2751164 YesWeKahn
YesWeKahn's picture

What he will do? make his Ahole wide open.

Thu, 08/30/2012 - 20:44 | 2751179 sbfeibish
sbfeibish's picture

If he really wants to impress.  He'll show up with a stone tablet.

Thu, 08/30/2012 - 20:47 | 2751183 Broken Window
Broken Window's picture

This is pitiful.

A thousand people freezing their butts off, waiting to worship a rat.

Thu, 08/30/2012 - 20:57 | 2751209 Atomizer
Atomizer's picture

This phenomena may catch on in the DC [District of Criminal] districts.

Block puts up 'rat crossing' signs

Thu, 08/30/2012 - 20:50 | 2751188 Tombstone
Tombstone's picture

So Benny pumps up the economy, it starts growing, and rates will have to rise.  But then, the deficits are also rising and more revenue has to go to pay interest on that debt.  More money to pay interest and entitlements means even more debt.  No matter what the FED does, Benny is painted into a corner.  And virtually so is the rest of the country.  Not to be outrageous, but with never ending money printing gold should hit $15-20k in the next 10 years.  This is one party that might eclispe the tech-stock run of the 1990's.

Thu, 08/30/2012 - 20:51 | 2751192 Freewheelin Franklin
Freewheelin Franklin's picture


Philly Fed pres, Plosser, schools Liesman.


Monetary policy does not create wealth.

Thu, 08/30/2012 - 20:54 | 2751203 chump666
chump666's picture

He is disgusting.

Wost still is the IMF saying to the ECB, you can print, we say it's ok.

Non voted, rogue governing academic madmen (and women) dictating policy.  Governments have to get those balls hardened and do something.  Or the people will.

It will get really messy.  Most if not all humans don't give a flying f*ck about the stock market (except us dirty traders).  Stress them out with oil/food inflation = global riots

Thu, 08/30/2012 - 20:56 | 2751207 nathan1234
nathan1234's picture

That Bum Ben will be yodeling from the Jackson Hole. And failing in doing that as his yodle has now become a whine.



Thu, 08/30/2012 - 21:10 | 2751235 Penny4378
Penny4378's picture

Bernanke's Jackson Hole (JH) speech this Friday morning. Some folks may suggest it's a risky time to comment on Fall expectations for the equity market. I don't agree as the macro will continue to cloud more rationally-induced near term directions for the tape. With the US election little more than two months away, politics is now the clear leader of market direction.

One result is that Mario Draghi has become the 'new' Bernanke. The Fed won't take any substantive action ahead of the election unless a 'black swan' hits the US economy.

Last week's 'Economist' wrote that more than half of the folks who say they'll vote for Romney, don't support Romney's views, but are merely anti-Obama votes. If that statistic remains relevant, amongst other implications, the relevance of the Fed itself could be on the table's menu. 'Helicopter Ben' won't be fueling any QE3 before the election with this tempest in his teapot; and that means its up to Mr. Draghi to keep the monetary machine cranked up.

Draghi, the ECB boss who's pulled out of his scheduled address to JH this Saturday, would have had no new information for attendees anyway. If his pitch wasn't sufficiently articulated enough already, he sure cleared that up with his editorial today, Wednesday, in Die Zeit.

My gut tells me that Mr. Bernanke played a growing role in catalyzing the increasingly more assertive Mr. Draghi. Months ago, Bernanke told it straight to Washington; I'm done, its now up to you to fix the fiscal side.

I'd say Canada's Mark Carney, Govenor of the Bank of Canada has also shown Mr. Draghi how to step out of the traditional mold of central bankers and speak your mind.  Despite the history of volatility in his views on the economy, Mr. Carney has become Canada's global statesman. He was the first to vocalize the appropriate medium term concerns emanating from various ailings with the current, broader financial statements of Canada.

So next week will be when the dried paint on the walls from the August markets will begin to unpeel. The festivities kick off on Sept 6th with the 'watched for' meeting at the ECB. Following this likely 'market moving' event, the next couple of weeks of the European agenda will be packed.

Specifically, there's a meeting of Euro finance ministers, meetings with other European leaders, a Dutch election, and of course, more Greek drama.

In fact on the Greek front, a great irony struck me the other when I read the August 2012 edition of the 'Economic Letter' from the Federal Reserve of Dallas ( The authors, Koech and Wang, tabled some analysis supporting the view that released Chinese economic data may be more optimistic than the actual state of the Chinese economy. But look at the Greeks; their economy is far worse than what's widely reported. It's little wonder the countries of Northern European are balking at coughing up more bucks amidst the contractions required by countries including Finland.

Given this scenario, the ultimate key to the direction of equities in the near term is whether the Germans will agree to mutualize peripheral sovereign debt. If Merkel's apparent 180 degree turn on this topic becomes reality, the next question is whether the requisite money printing to buy bonds is sterilized, i.e. neutral to the size of the ECB's balance sheet, or additive to their balance sheet, which is already larger than the Fed's.

This mutualization of debt would likely catalyze a strong near term move up in equities. Backtracking from the renewed optimism of significant ECB buying of sovereign bonds could result in the 8-10% correction in equities that many technicians are now predicting.

However, the implied volatility of such a down draft in equities may seem dwarfed by the future noise in currency markets. With short positions in the EUR vs USD currency pair cut by well more than half in the past couple of months, ECB balance sheet expansion combined with any view that the Republicans would control the White House and Congress could cause fresh lows in the EUR.

However, this dollar rally could be short-lived since either of a full GOP sweep and the subsequent ballooning in the F2013 fiscal deficit or a victory by Obama, and hence a gridlocked Washington, could serve to catalyze the (what I see is) inevitable QE3 next year.

Bottom line is that post the theatrics of Europe in September, the next imponderable is the U.S. election. It's a coin toss at this point, be it for the White House or control of the Congress. While each of the possible outcomes will generate different Q4 results for equities, the variance pales in comparison to what they'll mean for the composition of U.S. economy in the mid-term.

So the 'noise level' originating with politics during the next few months will likely reach a crescendo, potentially resulting in substantive moves up or down in the markets. But by next year, fundamentals will reassert themselves as key market drivers, and they won't have changed very much. The global recovery will remain weak and balance sheet leverage means monetary velocity (money supply divided by GDP) will ensure economic growth remains tepid. Hence, beyond the noise, broader equity markets will stay range-bound. Companies changing at the margin for the better and ones with the ability to grow their dividends will outperform.

Thu, 08/30/2012 - 22:25 | 2751358 Lore
Lore's picture



"Companies changing at the margin for the better and ones with the ability to grow their dividends will outperform."

Ain't gonna be no dividends. 2013 will be the Great Year of Layoffs as companies retreat ever deeper into survival mode. But hold the thought if it comforts you.

Thu, 08/30/2012 - 23:15 | 2751442 Atomizer
Atomizer's picture


Float shrink output options.. Wink wink nudge nudge. Then the bleeding will begin, sales forecast will report a upside down hockey stick. 

Board member will chime in.. We's should o' reduced product weight with muh beeotch.. Yo we's need uh Global Bailout ya'll is mad stupid.. Yo Obama said we's didn't build it Ya' know what I'm sayin'?

See how easy it is to spot desperation?? Simply humor.  

Thu, 08/30/2012 - 21:16 | 2751249 titty sprinkles
titty sprinkles's picture

I swear his picture on the main page just winked at me ~cringe~

Thu, 08/30/2012 - 22:05 | 2751329 Nobody For President
Nobody For President's picture

Well, you provoked him with your little picture...

Thu, 08/30/2012 - 21:24 | 2751263 monopoly
monopoly's picture

I think most of us will not be disappointed. We do not expect any QE, just babling by Bernank with maybe a little spittle in his beard.  But there will be nothing of substance tomorrow and I think most of the market already knows that and is pricing it in already.

A total non event. We expect nothing.

Fri, 08/31/2012 - 00:59 | 2751570 chump666
chump666's picture

he looks nervous.

Thu, 08/30/2012 - 21:32 | 2751275 laomei
laomei's picture

Anyone else notice that Time gave him devil horns?

Thu, 08/30/2012 - 21:56 | 2751306 SwingForce
SwingForce's picture

ALL you people are misguided, its RON PAUL who you should give your brainpower to. He's our only hope. EUROPE has lied more than my ex-wife, when do you hang up the phone the minute it rings? Are we suckerz or are we men? THINK! (ouch).

Thu, 08/30/2012 - 22:01 | 2751318 moldygoat
moldygoat's picture

i hope the J-tone rings at the J-hole and the bernank shits him self mid "easing".

Thu, 08/30/2012 - 22:01 | 2751319 Hugh Jorgan
Hugh Jorgan's picture

Maybe the yellowstone caldera can open up and swallow the A-Hole while he is in J-Hole! 

Thu, 08/30/2012 - 22:14 | 2751342 Nobody For President
Nobody For President's picture

I expect the number of words spent analyzing, bloviating, opionating, explaining and parsing Uncle Ben's speech will exceed the number of words spoken by the Chairsatan by a factor of 10 to the fourth.

I'm already sick and tired of the speech, and it is not due to happen for ~12 hours! I think this is a personal best record for me.

Thu, 08/30/2012 - 22:25 | 2751359 HardAssets
HardAssets's picture

I suspect he'll promise little, the stock & commodity markets (in particular the PMs)will be disappointed and head down.

The banksters have 5-6x as much money on Romnoid (campaign contributions) that they have on O, who they supported last time. Looks like they rode that horse as long as they could and theyre ready to switch horses to move their NWO agenda forward. Can't have the economy improving all that much into Nov.

But then again, - - - -who knows what will happen ?

Thu, 08/30/2012 - 22:35 | 2751373 Ted Baker
Ted Baker's picture


Thu, 08/30/2012 - 22:43 | 2751388 Alternative
Alternative's picture

Reminds me of the 'good ole'' days when every communist dictator's words were a revelation for the populace. But wait, those were peasants with the culture still stuck in 18-19th century?! Who are these? 

Thu, 08/30/2012 - 22:43 | 2751389 Alternative
Alternative's picture

Reminds me of the 'good ole'' days when every communist dictator's words were a revelation for the populace. But wait, those were peasants with the culture still stuck in 18-19th century?! Who are these? 

Thu, 08/30/2012 - 23:11 | 2751432 brace_brace_brace
brace_brace_brace's picture

There you go your buddies at JP are at it again. Doing what they do best. may be they are seeing the black swan? just like 2008. shampoo rinse repeat.

Fri, 08/31/2012 - 00:08 | 2751518 dexter_morgan
dexter_morgan's picture

Is the a-hole from j-hole still doing meet and greets with returning vets like he used to?

Fri, 08/31/2012 - 00:08 | 2751520 Blue Horshoe Lo...
Blue Horshoe Loves Annacott Steel's picture

Shouldn't this article's title read:

"Bernanke: The world's biggest counterfeiting A-Hole speaks from J-hole".

Fri, 08/31/2012 - 00:36 | 2751544 HeavydutyMexica...
HeavydutyMexicanOfTheNorthernKingdom's picture

Allow myself to introduce.....myself. my name is QE2012


Fri, 08/31/2012 - 01:54 | 2751630 q99x2
q99x2's picture

I'm not going to read a thing but instead look at the indexes and tell you what he said.

I don't think I like a stooge having control of the markets. Then again Bush was president for 8 fucking years. Something is wrong. How did life become so senseless I'd even go as far as saying idiotic. Must be the illuminati. Has to be. Because last I checked life is more mysterious than immaginable. An unimaginable mystery wrapped in wrapping paper covered with the faces of buffons.

Someone call the police. 

Fri, 08/31/2012 - 03:15 | 2751687 ebworthen
ebworthen's picture

" ready...liquidity....employment...stimulus...low rates...extended period..."

Markets:  "Peanuts!  Popcorn!  Cotton Candy!  Get 'em here!"

Fri, 08/31/2012 - 03:18 | 2751691 JHole2012
JHole2012's picture

Why the hell did the euro rise when Draghi said he isn't going to Jackson hole. Because he is working on an assasination attempt for Jens Weidman? Ridiculous idiotic markets.


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Fri, 08/31/2012 - 04:09 | 2751719 slewie the pi-rat
slewie the pi-rat's picture

holishitoli, BiCheZ!

our first bankster-commomorativeAvatar!


Fri, 08/31/2012 - 03:38 | 2751700 slewie the pi-rat
slewie the pi-rat's picture

i'm hearing from my hooves on the ground, now...

ever since last year, after they took DSK down, my fave jackHo-down is the BBQ where christineL gets fuked by a horse

a small horse?  a dog? 

well, that is the latest!  it's gonna be a dog!  it was a small horse last year;  of course

and we're having a fundraiser for tyler about what kinda dog it will BE!

and how many puppies?  are you shitting me?

WTF is tyler gonna do with all the money?

tomorrow, just before the benzelbub clears his throat and the gold price drops $37.50 in one nan0pube...

...that's the BBQ time (before the speech;  the dog is before the speech)  and every cowboy from 3 counties is gonna be there drinking with all the zeroHeads and the FEDheads and christine in those darling silver spurs that coco made for her

Fri, 08/31/2012 - 05:33 | 2751792 Yen Cross
Yen Cross's picture

 And so, The 4'th Horseman,( pale rider), set forth ( Famine/ despair)


                           Blahhhhh/ Blahhhh       "  Mother Nature"    decidesx 

Fri, 08/31/2012 - 03:33 | 2751704 JPMorgan
JPMorgan's picture

On standby to buy the potential gold slam down.

Fri, 08/31/2012 - 04:49 | 2751754 StychoKiller
StychoKiller's picture

The Bernank and "Solomonic" in the same sentence:  Pass that spliff if you please!

Fri, 08/31/2012 - 07:09 | 2751869 Super Marco
Super Marco's picture

And may the odds be ever in your favor.

Fri, 08/31/2012 - 09:55 | 2752330 ZeroAvatar
ZeroAvatar's picture

SSSHHHHHH, QUIET! Everybody!  It's time for the A-hole BUFU to make his speech!  (Watches Dow)


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