Joint Economic Committee

We all know that things are bad and getting worse. Goldman's Jan Hatzius take this opportunity to summarize all the various ways in which the global economy is floundering and once again floats the Goldman solution to everything: More QE, this time with a Bill Gross twist, pun and all, where the Fed again pulls a 2009 and goes for MBS: "Our confidence that the FOMC will ease policy once more at the June 19-20 meeting has also grown... Our baseline remains that Fed officials will purchase a mixture of mortgages and long-term Treasuries, financed via balance sheet expansion and possibly coupled with an extension of the forward guidance into 2015. This would be considerably more powerful than an extension of Operation Twist or other ways of changing the composition of the balance sheet, which are possible alternatives but are limited by the relatively modest amount ($200bn) of short-term paper that is still available for sale on the Fed's balance sheet." Well, if anything, global or Fed-based easing will most likely not come before the Greek June 17 elections - after all Greek confidence has to be crushed heading into the Euro referendum, and the only way to do this is by facilitating collapsing markets. So those hoping for a groundbreaking ECB announcement on June 6 will be disappointed. But June 20? That is fair game. We look forward to seeing PIMCO MBS holdings rise to a new all time high when the monthly TRF update is posted in a few days. Also look for something like this in the EURUSD if and when Bernanke surprises few at 2:15 pm on June 20.

One word explains the overnight action: confusion. After opening down 10 points just shy of unchanged for the year following fearful Asian trade, futures have rebounded and are now almost unchanged courtesy of a UK-market which is offline for the next two days, letting Europe take advantage of another day of impotent rumor-mongering and wolf-crying, this time focusing on a 7pm press conference in which Merkel will say more of the same vis-a-vis Europe's non-existence Banking Union, but at least Europe will have closed at the highs. Not much on today's docket so expect more kneejerk reactions to rumors, which have a positive half-life measured in the minutes.

John Taylor, of the Taylor-Rule, who has not been sheepish with his views towards the Fed openly questioned the Fed's independence during a speech to the Joint Economic Committee today. During his testimony at the hearing on the 'Sound Dollar Act of 2012', Taylor noted: "The discretionary interventions of the Federal Reserve have been ratcheted up in such unprecedented ways in recent years that they raise fundamental questions about the future of monetary policy." Perhaps more pointedly, especially given Bernanke's speech today on the Fed's extreme actions and given the hope for a constant interventionist role for the Fed to keep our economy market afloat "The fact that the Fed can, if it chooses, intervene without limit into any credit market - raises more uncertainty, and of course raises questions about why an independent agency of government should have such power."

Anyone Who Thinks that War Is Good For the Economy Has One Eye Covered ... And Is Only Looking At Half the Picture ...

He's in the process of ruining the country. 

Bernanke testimony before Senate will dominate the morning newsflow, with Greek headlines the usual risk of kneejerk reactions. Otherwise, we get JOLTs and Consumer Credit, hearing on a payroll tax-cut extension, and another GOP primary.

Bernanke will testify before the Joint Economic Committee today to offer his outlook on the state of the economy, governmental financial policy, and federal spending priorities. Last time he testified on the Hill, the Fed Chairman said the U.S. economy was showing signs of a "self-sustaining recovery" but cautioned that another four to five years may pass before unemployment levels fall to historic norms.  Presenting the semi-annual Monetary Policy Report provides an opportunity for the Fed to update its view on the economic outlook directly to Congress. Watch out for any notable keywords such as "QE3-XXX", "Keynesian Paradise", "Turboprint", "Hyperinflation" and last but not least "Gold is money."

For those who miss the daily reruns of the televangelist driving the audience into a frenzy with chants of "pass this bill", before the donations plate is passed around, fear not: there is much to look forward to in the next few days, headlined by the Chairsatan, who already has his eye on the turboprint button all over again, who will testify on his economic outlook to the Joint Economic Committee later today.