anBernanke Sees Signs Economy is Improving and Fiscal Policy Risks

• Large and increasing level of government debt runs risk of serious economic consequences
• Long way before labor market can be said to be operating normally
• Fed will continue to monitor situation in Europe closely, and take every available step to protect US financial system and economy
• There are concerns that have been weighing on US business investment
• Inflation has declined and Fed expects it to remain subdued
• Signs economy has declined and Fed expects it to remain subdued

Bobbys Corner-Open Market-January.26.2012

Good Morning:

With the ongoing sage between the Greek government and private investors continuing-there have been reports of the private sector accepting a interest rate of less than 4%.  This is a major barrier that will now allow Grrece to seriously revamp their debt.  Greece has a 14 billion euro payment due in March-and without the help of the IMF or ECB-they will not be able to meet this deadline.
This news pushed the EUR/USD pair into the mid 1.31 handle (1.3173).
Italy sold 4.5 billion euro worth of 3 year notes-with the lowest yield since last August.  The yield was 3.763% versus 4.853 on the last 3 year note auction.

Yesterday’s press conference by Fed Chairman Bernanke brought the possibility of a third round of QE to the markets if unemoloyment remains high-so I guess we will see more QE by the 3rd quarter of this year.
He also talked about keeping interest rates low through 2014.

Gold, Silver and Oil are all higher-as are equities and futures.

HAVE A GREAT DAY & GOOD LUCK

Fed Chairman Ben Bernanke Press Conference

http://www.federalreserve.gov/newsevents/press/monetary/formcprojtabl20120125.pdf

• Fed is not changing the way it conducts monetary policy
• Fed aims to support a stronger recovery, and reiterates the highly accomodative stance
• Reiterates late 2014 interest rate language
• Clarity of policy direction is objective
• Higher Inflation would reduce ability on decisions
• maximum employment on equal footing with stale prices
• not feasible for any central bank to fix long run goal for employment
• Maximum employment level is not ‘immutable’
• Economy is expanding moderately with some slowing in global growth
• Jobless rate is elevated
• Further improvements in labor market
• Private sector effort must be significant
• Oil and commodities prices have flattened, turned to the downside
• CPI has been subdued, inflation should be at, or below, FOMC mandate
• Policy assessments should not be viewed as unconditional pledges

Fed Chairman Bernanke Speaks From Washington

Says:

• Sees more accomodative financial conditions
• Fed ‘prepared to adjust’ holdings
• Longer-Run estimates inherently uncertain
• Mandate consistent inflation is 2% or ‘bit less’
• Oil down from peaks
• FOMC expects only ‘moderate pace’ of growth
• Jobless rate to gradually decline in coming quarters
• FOMC expects unemployment to fall only gradually
• ‘Pace of progress is likely to be frustratingly slow’
• Will monitor Europe closely
• Europe debt crisis may harm, confidence, growth
• ‘Inflation appears to have  moderated’
• Fed seeks to enhance communication clarity
• FOMC did not make decision on communications

Fed Chairman Bernanke Speaks at Conference In Boston

Says:

• Flexible inflation goal not enough to ensure stability
• Fed is more transparent on outlook, policy
• Crisis to have profound, lasting economic impact
• Applying lessons of crisis to ‘take some time’
• Does not discuss economic outlook
• Fed to increasingly use communication ‘tools’
• Fed seeks to increase clarity about policy goals

Bobbys Corner-Open Market-Sept.8.2011

Good Morning:

A fairly uneventful overnight session ahead of today’s busy schedule of policy news and speeches. 
We start with rate announcements by the BOE and ECB (both rates were left unchanged).
This will be Trichet’s farewell press conference, and traders are looking for any signs of a change in policy.  This will be followed by speeches today by Fed Chairman Bernanke and this evening by President Obama. 
President Obama will outline his new $300 billion jobs program.  Let’s all hope that this speech has some real “punch” to it-and is not a political campaign speech. 

US unemployment claims rose this week-as yet another sign of the struggling US labor market.  With the global and US economy at risk for a double-dip recession, firms are looking to cut their labor costs, and are slow at ramping up production.

Equity markets and Futures are lower.
Gold is higher-Oil fairly stable at $88/bar.

HAVE A GREAT DAY & GOOD LUCK

Bobbys Corner-Open Market-Sept.7.2011

Good Morning:

Swiss nationals welcomed the decision by the Swiss Nat’l Bank to halt the appreciation of the CHF.  The exporting sector has been reeling the past few weeks with the appreciation of the CHF-as the cost of chocolates,cheese, Swiss knifes, watches,  and all other exported products reached sky high levels.

In other FX news-the USD lost steam, as equity markets rallied.  The Euro was stronger after a German court rejected constitutional changes to Germany’s participation in the Euro Zone’s rescue package.
Market participants are anticipating that Fed Chairman Bernanke will announce additional monetary easing   meaures in a speech on Thursday.

President Obama will also be making a speech tomorrow evening to a joint session of Congress to propose a new jobs program.  This program is being started with a $300 billion infusion into the economy next year.  The infusion will come in the form of tax cuts, direct aid to state and local governments, along with a infrastructure spending bill.
More than half of the infusion will come in  the form of tax cuts-which will be through a reduction in the payroll tax paid by employees and employers.
White House press secretary Carney refused to give specific details until after tomorrow’s speech.

Equity markets are higher-as is Oil and Gold is off $40/oz.
US Futures are looking for a higher opening this morning.

HAVE A GREAT DAY & GOOD LUCK

Ben Bernanke Speaks in Washington

Says:

• Sudden fiscal contraction should be avoided
• Growth of national debt ‘clearly unsustainable’
• Maintaining budget status quo ‘not an option’
• Growing debt risks ‘serious economic consequences’
• Political leaders must avoid ‘brinksmanship’
• Failure to raise debt limit would be self-defeating
• Urges politicians to craft long-term fiscal plan
• Prioritizing payments could still rattle markets
• Debt limit ‘wrong tool’ to force budget cuts
• Sudden contraction risks hurting fragile recovery
• Long-term plan for debt reduction is needed

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