Summers' Season Is Over: The Morning After

Now that the market has had a day to digest the Summers news, its conclusion is still the same: the man who deregulated and was on Wall Street's payroll for years (when he was not busy micromismanaging Harvard's endowment) and yet was somehow supposed to be Wall Street negative by bearing "hawkish", would have been bad for stocks. And while there was not a correction per se associated with the Summers' appointment or rumor thereof, the fact that he is now out, is even more bullish for stocks, and the correction that never was, can be uncorrected, sending stocks to new record highs, and all EM trades which had unwound modestly on fears of an end of the Fed carry trade, are getting rewound, even as gold has retraced all gains since the Friday fixing because while Yellen is pro-printish, she too is expected to be able to unwind any resurgent inflation in precisely "15 minutes." Here is what else is being said.


  • Pimco’s Gross says stocks should do “very well”; Yellen regains front-runner status
  • Krugman says “nobody else as qualified” as Yellen
  • Markets may see Yellen as shoo-in: NAB
  • Yellen may not become Fed Chair: Capital Economics
  • Yellen as Fed Chief may lead to weak dollar L/T: Commerzbank
  • Policy differences among candidates small: JPMorgan
  • Summers pullout adds to USD pressure before FOMC: Morgan Stanley
  • EU currencies likely to be bought: Citi
  • Decision to support Asia FX: Credit Agricole
  • Summers’ exit could spur knee-jerk rate rally: Barclays
  • Summers-led flattening may reverse on taper concern: Commerzbank
  • Decision may delight emerging markets, risk markets: IG
  • Julius Baer also sees boost to emerging market equities
  • Summers exit positive for markets: Aberdeen Asset Management Asia
  • BOT-Mitsubishi UFJ economist Rupkey sees possibility of Bernanke third term, Yellen “even more dovish” than Bernanke
  • Summers’ exit removes uncertainty in market: Eaton Vance
  • Decision boosts rate doves: Manulife
  • Yellen as Fed Chief may lead to weak dollar L/T: Commerzbank
  • Withdrawal means ‘great deal of certainty,’ Rivkin says
  • Yellen more prepared to keep up QE: Jerram


  • Bunds lead gains in Europe bonds after Summers quits Fed race
  • Pound climbs to 8-Month High on Summers withdrawal; gilts rise
  • EUR/USD +0.4% to 1.3350 vs session high 1.3382
  • S&P 500 Futures rise 1.24% to over 1700
  • Asian equities gain; MSCI Asia Pacific Ex-Japan Index +1.4%
  • Dollar drops vs yen; won at six-mo. high
  • 2Y USTs -5bps at 0.3830%; 10Y -7bps at 2.8162%
  • Oil falls, gold falls

Source: Bloomberg