different interpretations of this “nothing”
It was a
wild ride in gold today with a top to bottom over $100 as show in the
Some Blame Bernanke For "Committing to Nothing"
Bloomberg reports Gold Falls in ’Manic’ Plunge as Bernanke
Damps Stimulus Bets
Gold futures fell as
much as $100 to below $1,700 an ounce on signs that that the Federal Reserve
will refrain from offering more monetary stimulus to bolster the U.S.
In testimony before Congress today, Fed Chairman Ben S. Bernanke gave no
signal that the central bank will take new steps to boost liquidity.
“People were expecting that the Fed would loosen policies, even if the
perception is that the economy is doing well,” James Dailey, who
manages $215 million at TEAM Financial Management LLC in Harrisburg,
Pennsylvania, said in a telephone interview. “The investor sentiment
changed as the Fed committed to nothing. This is the manic nature of the market.”
Bernanke Hints at
In video commentary Fox News says Bernanke Hints at More Quantitative Easing
Hints at More QE? Really? How about this
Door is Open, But Not For A While
The Wall Street Journal reports Comex Gold Tumbles On Bernanke Testimony
comments to Congress left the door open for more QE,"
said Steve Scacalossi, a director of precious
metals with TD Securities, in a note. "But his statements that
employment is recovering at a better than expected rate implies that if QE is
coming, it won't be for a while."
The LA Times says Bernanke's testimony
in Congress pushes down gold, silver prices
Reserve Chairman Ben S. Bernanke's words carried a great deal of weight in
the commodity markets — so much so that they squashed the prices of
gold and silver.
Bernanke told Congress that the U.S. economy was probably headed for modest
growth this year, adding that the current increase in oil and gas prices
probably would reverse before sparking long-term inflation.
The presentation Wednesday signaled to many
investors that the Fed's embarking on another round of quantitative easing
was an increasingly improbable scenario.
"When Bernanke didn't mention the possibility of another round of
monetization, that was enough to take the fizz out of everything," said
independent commodities analyst Dennis Gartman.
"Before today, gold was looking quite strong, but today it just gave up
Dovish Undertones With Markedly Less-Dovish Testimony
Yahoo! Finance reports Euro Tanks, U.S.
Dollar Surges on Bernanke Testimony
Reserve Chairman Ben Bernanke was on Capitol Hill today testifying in front
of the Committee on Financial Services. Despite overall dovish undertones,
the chairman’s testimony was markedly less-dovish than recent
Federal Reserve communiqués, boosting the U.S. Dollar across the
Please consider Semiannual Monetary
Policy Report to the Congress,
Testimony by Ben Bernanke.
A quick sscan shows Bernanke did not mention the
word "quantitative" once. The Only reference to "easing"
was in relation to constraints on motor vehicle parts in Japan related to the
Bernanke did say growth would be close to or somewhat above second half of
last year but "fundamentals that support spending continue to be
weak". More specifically the Fed forecasts "2.2 to 2.7 percent,
considerably lower than the projections they made last June"
He also said "housing affordability has increased dramatically" but
"potential buyers lack the down payment ... others are reluctant to buy
a house now because of concerns about their income"
In regards to unemployment, Bernanke said "With output growth in 2012
projected to remain close to its longer-run trend, participants did not
anticipate further substantial declines in the unemployment rate over the
course of this year. Looking beyond this year, FOMC participants expect the
unemployment rate to continue to edge down only slowly toward levels
consistent with the Committee's statutory mandate."
That's "markedly less dovish"? Really?
What does that mean for QE?
Nothing. That's what.
People can and did read into Bernanke's testimony what they wanted to hear.
Others judged the market reaction, and wrote a corresponding explanation to
One thing's for certain, that was hardly an upbeat assessment of the economy
especially in light of the statement that "global financial markets
posed significant downside risks".
Here's the deal. If the economy tanks the Fed is likely to do another round
of QE. The same holds true for another LTRO by the ECB.
By the way, a couple of the links above came via email from Pater Tenebrarum at the Acting Man Blog, who in turn got
them from Lance Lewis. Thanks!