What To Expect From Bernanke At Jackson Hole

Tyler Durden's picture


With the world's suckers investors (CEOs, politicians, and peons alike) all hanging on every word the man-behind-the-curtain has to say on Friday, Stone & McCarthy has crafted an excellent 'what-if' of key takeaways and interpretations ahead of Friday's Jackson Hole Symposium speech by Bernanke. Will Draghi toe the line? Will China be pissed? and what rhymes with J-Hole?

Via Stone & McCarthy Research Associates

Key Takeaways:

1. We expect Bernanke will reiterate the Fed's options for providing further stimulus, and its willingness to act "as needed", but not signal any specific policy action or its timing due to proximity to the September 12-13 FOMC meeting.

2. The case for further stimulus may have weakened since the July 31-August 1 FOMC meeting due to somewhat better economic data, especially for housing. It could be further reduced if the Beige Book does not suggest any substantive deterioration in conditions, and/or the August employment report shows job creation remains about on trend.

Fed Chairman Ben Bernanke will deliver the keynote speech at the Kansas City Fed's annual symposium at Jackson Hole, WY. He speaks at 10:00 ET, and his topic will be "Monetary Policy Since the Crisis." He has covered this subject before. His comments will probably offer a few updates since the last time he spoke on a similar theme. Since that time the FOMC has continued its Maturity Extension Program with an additional $267 billion in sales of shorter-term Treasurys and buys of longer-term Treasury notes and bonds. The FOMC has held two more meetings at which communications policy has been thoroughly discussed.

Markets are anticipating that Bernanke will give an indication of more stimulus -- the focus is for a third round of large-scale asset purchases or so-called "QE3" -- as he did back on August 27, 2010 when the second Large-Scale Asset Purchase (LSAP) program was signaled. However, at that time the next FOMC meeting was over three weeks distant from the speech, and the FOMC was not scheduled to update its forecast until eight weeks later at the November 3 meeting.

This year, the FOMC meeting is a scant two weeks away and will include an update to the Fed's collective expectations for the economy. The Committee already upped the anticipation for more easing with its August 1 statement that switched to "as needed" from the "if appropriate" language of the June 20 statement. The change was consistent with FOMC statements during the period of the financial crisis in late 2008 and early 2009, and conveys the heightened sense of urgency regarding possible policy actions. The Chairman may not feel the need to re-do the Committee's work in this regard.


If Bernanke wants to de-emphasize the importance of his individual remarks, and elevate the collective nature of the decision-making, his Jackson Hole remarks could serve that purpose by directing attention to the next FOMC meeting. We also note that Bernanke and Vice Chair Janet Yellen have commented on several occasions that while a great deal of preparation goes into the FOMC meeting in terms of possible wordings for the statement and analysis of forecasts for the Districts and nation, no decision is final until the end of the meeting.


Between now and the start of the deliberations on September 12, the FOMC will get two closely-watched reports on the economy: the Beige Book at 14:00 ET on Wednesday, August 29, and the August employment data at 8:30 ET on Friday, September 7. If these show no substantive deterioration, the FOMC may opt to wait until there is a clearer case for more easing. After all, the MEP is still in place and will run through the end of 2012.


The other critical factor will be conditions in the eurozone, and the headwinds posed by market volatility associated with the sovereign debt crisis and economic recession. Should the situation in the global economy be more stable, there will be less reason for Bernanke to signal imminent action.

Bernanke is likely to reiterate the options the Fed has in providing more easing, and these are should follow along the lines mentioned in the July 31-August FOMC meeting minutes. We expect the Chairman will be anxious to allay any concerns that the Fed lacks the tools to provide more accommodation. In particular, he may reinforce that the Fed staff projections indicate that there is "substantial capacity" in the market for another large-scale asset purchase program without causing disruptions.

We will be curious if the references to exploring the Bank of England's "Funding for Lending Scheme" for "possible programs aimed at encouraging bank lending to households and firms" has resulted in any elevation of this option in the hierarchy of possible tools to be used. If it has, Bernanke could highlight it to reassure that the Fed does have options, and remains fully engaged in finding the right ones to address current economic conditions.

On balance, we think Bernanke will save the policy directives for the FOMC meeting while highlighting that the Committee is vigilant and flexible, and ready to act.

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Mon, 08/27/2012 - 13:23 | 2741246 Deep79
Deep79's picture

Amazing all the talk of QE from ZH to CNBC. All I read is QE this QE that, more stimulus coming.


I have said it many times in last 4 months, their will be no QE3, all talk, and if there is a QE3, we will sell off hard.





Mon, 08/27/2012 - 13:26 | 2741253 Badabing
Badabing's picture

When Ben Dover talks PMs take a dive!


Mon, 08/27/2012 - 13:36 | 2741278 malikai
malikai's picture

My $0.02.

What I expect from Jackson's Hole:

  1. Stop hunts.
  2. PM shennanigans.
  3. Counterintuitive(insane) responses.
  4. Excellent fade opportunities.
  5. Potential blue light specials in energy and metals.
  6. Some bearded guy speaking for ages and saying precisely nothing.
  7. A long letter demonstrating the deciders:
    1. Know absolutely nothing of what they're talking about.
    2. Are intellectually bankrupt.
    3. Will continue to serve their owners.
    4. Will bluff or print.
Mon, 08/27/2012 - 13:44 | 2741293 ZerOhead
ZerOhead's picture

We now interrupt the regularly scheduled Global Economic Collapse for a brief musical interlude...

Jackson Browne Hole 

(Front) Running on Empty 1977...


Mon, 08/27/2012 - 14:08 | 2741383 NotApplicable
NotApplicable's picture

<=== Handjobs

<=== Blowjobs

Mon, 08/27/2012 - 14:02 | 2741372 azzhatter
azzhatter's picture

I'm hoping for a story "Bernanke Get's his QE stuck in Draghi's arse" or "Herman Von Rumpoy get's cornholed by a Wyoming rancher" or even a "Geithner gets beat up by a Jackson Cornhole pre-schooler"

Mon, 08/27/2012 - 13:28 | 2741267 spastic_colon
spastic_colon's picture

....which is why all it takes is talk anymore.


o/t a must listen to Santelli about counterfieting today....i'm not smart enough to figure out how to link the video from CNBS....sorry


Mon, 08/27/2012 - 14:11 | 2741392 tawse57
tawse57's picture

But markets will convince themselves that QE3 will come at the FOMC or in November. They BELIEVE it is coming and nothing seems capable of making them think otherwise.

Kicking the can down the road again.

Mon, 08/27/2012 - 18:45 | 2742150 zoggl
zoggl's picture

Agree! No major sell off will happen. May be a small raid on the PM's by the cartell, which will be bought. No QE this time will just increase the probability of QE next time, the economy will not get better. This economy runs on money printing, why should they stop doing it ....

Mon, 08/27/2012 - 14:15 | 2741401 tawse57
tawse57's picture

I have said it many times in last 4 months, their will be no QE3, all talk, and if there is a QE3, we will sell off hard.

Sell off of what? Why would anything sell off if he announces QE3?

Mon, 08/27/2012 - 14:21 | 2741418 Deep79
Deep79's picture

the fact that we are at 1410 SP, on all fluff, about 100-200 SP points have already been added on buy the rumor. It will be a sell the news event type. 

As well, when everyone and their Dog is waiting for QE to make "an easy 20%", it aint happening, plain and simple



Mon, 08/27/2012 - 14:54 | 2741514 tawse57
tawse57's picture

I hope you are right. A drop of 200 points on the S&P is needed to begin to bring reality back to these markets.

But knowing this market Bernanke will say nothing and the DOW which shoot up.

Mon, 08/27/2012 - 15:08 | 2741580 SheepDog-One
SheepDog-One's picture

Right, theyre not going to do what everyone is expecting and has already placed their bets on, theres no upside to that.

Mon, 08/27/2012 - 19:31 | 2742249 smlbizman
smlbizman's picture

deep it has never stopped...that is why they dont have to do qe3....who do you think is buying our treasurys...japan? europe? the debt the fed is not buying on the surface they are buying thru conduits like japan et. al..........that is why they can lie and you believe.....wake up, we never need qe agian it is already in perpetual motion....i guess the guys were wrong that perpetual motion doesnt exist....

Mon, 08/27/2012 - 13:25 | 2741255 Snakeeyes
Snakeeyes's picture

Agree. Just a reiteration of "Standing by!"

To do what? M2 Money Velocity at post WWII low and employment to population ratio is stuck and can't move given our aging population.


If Bernanke eases and Romeny wins, he is gone. If Obama wins, he stays.

Mon, 08/27/2012 - 13:47 | 2741326 Quinvarius
Quinvarius's picture

Velocity is low because of the huge amount of money we printed in a very short time frame.  Look up the math.  I am done trying to explain the obvious for today.  If they print more money today, velocity will drop even more.  It is a meaningless indicator at this time.

Mon, 08/27/2012 - 13:27 | 2741261 Brazillionaire
Brazillionaire's picture

Benny, I think you drop money out of a helicopter because it can hover in one spot. If you're so gung ho to drop money, next time drop it from a 747 at 30,000 feet... better dispersal that way. I might even find ten-spot or two float my way.

Mon, 08/27/2012 - 13:56 | 2741355 azzhatter
azzhatter's picture

Fuck You Bernanke

Mon, 08/27/2012 - 13:27 | 2741262 francis_sawyer
francis_sawyer's picture

Frankly ~ I'd be more excited & interested in what to expect from Jackson [as in 'Andrew'] to shove up Bernanke's Hole...

Mon, 08/27/2012 - 13:31 | 2741276 not fat not stupid
not fat not stupid's picture

Why would Bernanke drop his pants and say "kick me " to Romney 2 months before the election?

Mon, 08/27/2012 - 14:37 | 2741459 Nothing To See Here
Nothing To See Here's picture

Maybe JPM got tired of Michelle O's food crusade and they ordered a Romneyburger to the Bernank?

Mon, 08/27/2012 - 13:33 | 2741280 SheepDog-One
SheepDog-One's picture

'Beardman of J-Hole'....sounds like a B-reel monster/porno flick.

Mon, 08/27/2012 - 13:33 | 2741282 HD
HD's picture

There is always some deus ex machina weeks or months down the road we must wait for. Nothing ever happens. The check is always in the mail. The can forever kicked.

Don't fear the reaper.

Mon, 08/27/2012 - 15:21 | 2741637 Jungle Jim
Jungle Jim's picture

You said it. Yea, verily.

Mon, 08/27/2012 - 13:33 | 2741284 fonzannoon
fonzannoon's picture

Bernanke has completely succeded at one thing. He has the whole frreaking world including this site  salivating over his every single utterance. That truly is something and it does imply that he is pulling the strings. The day the market and the media ignore him is the day I get interested.

Mon, 08/27/2012 - 13:41 | 2741307 Abraxas
Abraxas's picture

I get the same feeling. As soon one of them jumps on the table and starts screaming “Look at me! Look at me!” it’s time to look the other way, where everything seems normal. Smoke and mirrors techniques, as old as they are, seem to be working perfectly fine (here as well).

Mon, 08/27/2012 - 14:45 | 2741487 kito
kito's picture

Fonz, get interested? You ARE interested..........hence your posts.......

Mon, 08/27/2012 - 16:15 | 2741828 fonzannoon
fonzannoon's picture

Just because I am not some sick addicted gambler throwing around turkey sandwiches without regard does not mean I can't have some fun on here....

Mon, 08/27/2012 - 13:38 | 2741299 Dr. Engali
Dr. Engali's picture

The whole freaking financial world revolves around one man's comments. Are we the only people who see a problem with this?

Mon, 08/27/2012 - 13:43 | 2741314 Abraxas
Abraxas's picture

It's not the man that is important, but what he represents.

Mon, 08/27/2012 - 13:48 | 2741337 kellirose
kellirose's picture

... and he has never been ahead of the curve .. reacts to crisis ...

Mon, 08/27/2012 - 14:17 | 2741409 Spastica Rex
Spastica Rex's picture


Mon, 08/27/2012 - 13:43 | 2741318 Piranhanoia
Piranhanoia's picture

Hole betting.  

Mon, 08/27/2012 - 13:44 | 2741321 sbenard
sbenard's picture

Better housing data? I wonder how that will be impacted by rising interest rates over the past month, combined with the end of the summer buying season!

Mon, 08/27/2012 - 13:45 | 2741325 Scalaris
Scalaris's picture

I expect for US commercial banks deposits to round up to $10 trillz, while crude & gasoline futures go parabolic, and elevated fuel prices, along with a spike in headline and commodity inflation end up damaging an already fragile consumer sentiment and completely nullify any positive effects from additional yet unnecessary liquidity.

Mon, 08/27/2012 - 13:50 | 2741343 Quinvarius
Quinvarius's picture

Banks will continue to get free money and bailouts to fill their black holes.  Is that QE?  Is that worse than QE?  I don't know.  But I don't expect anyone to admit anything. 

Mon, 08/27/2012 - 13:52 | 2741347 Whoa Dammit
Whoa Dammit's picture

All he ever really says is Yes Sir to his masters like a good little step & fetch it. Unfortunately he is extremely verbose when doing so.

Mon, 08/27/2012 - 14:01 | 2741352 Cthonic
Cthonic's picture

China has announced a total of 8 trillion yuan (£800bn) of "stimulus projects" to try to boost confidence in an economy that appears to be cooling faster than expected.


edit: Acting so the Fed has room?

edit2: 3 trillion yuan on eco-tourism and national parks and 2 trillion on carbon emission reduction?  WTF is this article for real?

Mon, 08/27/2012 - 14:20 | 2741416 Spastica Rex
Spastica Rex's picture

Your avatar intrigues me. Cover of Pandemonium by Killing Joke?

Mon, 08/27/2012 - 14:57 | 2741527 Cthonic
Cthonic's picture

You are correct; just an old fan, not affiliated with the band. Figured it would be more obscure than any sacred ikon.

Mon, 08/27/2012 - 13:59 | 2741366 Anasteus
Anasteus's picture

I very much hope no signal for the action is going to take place. I need general disappointment and gold price down to pile up some at discount prices.

Mon, 08/27/2012 - 14:28 | 2741441 diogeneslaertius
diogeneslaertius's picture

QE3 already happened in the form of endless back-end twistage

QE3.5 already underway

Mon, 08/27/2012 - 14:29 | 2741445 diogeneslaertius
diogeneslaertius's picture

$4Q (christ do i have to go up to 7, i do dont i, jesus) #EconomicDeathstar run by NWO madmen

enjoy the POTUS2012 reality show

(we are all ron paul now)

Mon, 08/27/2012 - 14:30 | 2741449 YesWeKahn
YesWeKahn's picture

Bernankhitt penetrates Jack hole, can't get out.

Mon, 08/27/2012 - 14:45 | 2741488 outamyeffinway
outamyeffinway's picture

"Bernanke Punt". He'll wait for the German high court to rule.

Mon, 08/27/2012 - 14:54 | 2741517 q99x2
q99x2's picture

Good place for the next wannabe president to evoke the NDAA. Arrest them.

Mon, 08/27/2012 - 15:19 | 2741625 johnjkiii
johnjkiii's picture

They haven't tried the cram-down loans to private companies that worked so well for the BoJ. Well, ok, it didn't work but that doesn't mean Benny can't try it, right?

Mon, 08/27/2012 - 15:22 | 2741641 tahoebumsmith
tahoebumsmith's picture

I don't see the FED doing anything until the SEP 12th decision in Europe. They may be the lender of last resort and be forced to launder money through the ECB which may leave another round of QE questionable here in the US. One thing you can count on for sure is the CNBC interview with Steve LIESman sitting on that stupid dock with the fly fishing pole in hand, trout flies on the vest and the Teton backdrop telling us all how fortunate we are to have the Federal Reserve running the Country!  

Mon, 08/27/2012 - 15:22 | 2741643 Renewable Life
Renewable Life's picture

Now why would that knucklehead announce anything 2 months before a Prez election, a bombing of Iran, and the EU tap dancing its way toward a collaspe??

Jesus people, didnt you learn anything from 2008???? No panic and hysteria, no Helicopter Ben!!!!!

Mon, 08/27/2012 - 15:40 | 2741686 TWSceptic
TWSceptic's picture

Biderman thinks the fed is going to announce QE friday. I think he's dead wrong. ZH made some good points. But is was clear the whole time to anyone who was paying attention that the fed wasn't going to do anything until SHTF. Certainly they don't like that people suspect that what they do is political, you now, because they like to be seen as 'independent'.

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