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Bernanke in Jackson Hole: Don’t Make Me Do It!

Anyone who was waiting for a “man bites dog” moment from Federal Reserve Chairman Ben Bernanke’s address at Jackson Hole can keep waiting.  The Chairman’s message today was the same that is has been for some time:  The Bernanke Put lives on, but the Fed will only break the glass in case of an emergency.

“Risk on” assets initially lost some early morning market gains, but quickly returned to pre speech levels. Ten year treasury notes remained steady with a yield of 1.62%.

Hank Smith of Haverford Investments told CNBC that Bernanke’s speech should have been titled “Monetary policy has worked, now it’s time for fiscal policy.”

Indeed Bernanke noted in his speech that while aggressive and non-traditional response by the FED in 2008 and 2009 likely averted further economic damage, “Monetary policies cannot achieve by itself what a broader and more balanced set of economic policies might achieve.”

In particular the Chairman cited that the labor market was a “grave concern” and that a continued level of higher than normal unemployment could “wreak structural damage on our economy that could last for many years.”

In the meantime policy sensitive investors will turn attention back to the European Crisis and the ECB meeting of September 6th, where ECB President Mario Draghi is expected to release details of a bond buying plan.

In the U.S. attention will turn to the Fiscal Cliff debate and the looming expiration of the “Bush” tax cuts at the end of the year.  Most observers do not expect any progress on the fiscal cliff debate until after the November elections.

The next FOMC meeting is a two day affair scheduled for September 12th and 13th.

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DISCLAIMER: Nothing in this article should  be construed as a personal recommendation or investment advice.  Nor should anything in this article be construed as an offer, or a solicitation of an offer, to sell or buy any particular investment security.   Investors should conduct their own due diligence and seek the advice of a financial and/or investment  professional before making any investment decisions.

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