All this is just a show : Obama already decided it is so obvious
Friday 13th Markets Jolted By News Summers Appointment Coming As Early As Next Week
Overnight asset classes got a jolt following a report by Nikkei that Obama was moving toward naming Summers the next Fed chairman, citing “several close US sources,” pushing stocks modestly lower in Europe, with bond yields higher. According to the report, Obama is to name Summers as next Fed chairman as early as late next week, after the Federal Open Market Committee meeting. Otherwise, risk is still digesting the news of the confidential Twitter IPO, as it is becoming quite clear that some of the largest names (Hilton also announced yesterday) are seeking to cash out in the public markets. Is this the top?
Profit taking related flows also said to have contributed to the move lower in equities. The fact that the majority of analysts see Summers as having a hawkish stance encouraged further speculation of QE tapering, which consequently supported the greenback and weighed on the commodities complex. In addition to that, constructive talks between US’s Kerry and Russia’s Lavrov prompted markets participants to scale back expectations of a military intervention in Syria which in turn saw front month WTI crude futures move back below the 21DMA line. As a result, oil & gas, as well as basic materials sectors are seen as the worst performing stocks in early trade.
On today's minimal event lineup is the U.Michigan survey reading, as well as the latest Fed's Outright Purchase op. Also of note it is Yom Kippur today which may be reflected in lighter trading volumes stateside as the session progresses.
Overnight news bulletin from RanSquawk and Bloomberg:
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White House denies : White House denies Japan press report on Summers - MarketWatch
Larry Summers Knew Exactly What Was Coming Months Before The Financial Crisis GotUgly
Yes, Larry Summers had a much better understanding of the seriousness of the situation in March 2008 than either the Federal Reserve Open Market Committee, the Bush Treasury, or the Princes of Wall Street. Why do you ask?
Lawrence Summers: SIEPR: March 7, 2008:
My message this morning is not going to be a cheery one. I believe that we are facing the most serious combination of macroeconomic and financial stresses that the United States has faced in at least a generation--and, possibly, much longer than that.
I want to do several things this morning:
The right policy presumption is that the US economy will be judged to currently be in recession… [with] quite remarkable dislocations that we are current seeing in housing and credit markets…. It is a matter of arithmetic to calculate the number of mortgages that will be on homes with negative equity with a 25% decline in housing prices…. 15 million such mortgages worth 30% of all the mortgages in the United States with a combined value of over $3 trillion dollars…. Current estimates of mortgage losses are $400 billion dollars… [and] there is every reason to believe that those estimates are substantially optimistic….
Borrowers who, as recently as six months ago, were regarded as bullet-proof are finding it difficult to borrow at almost any price…. Many of the nation’s major financial institutions now are forced to pay more than 2 percentage points above the US Treasury rate in order to borrow for even five years… institutions that, as recently as nine months ago, were borrowing at spreads of 30 or 40 basis points…. We are in unusual territory with respect to recession. We are in nearly unprecedented territory with respect to financial strength….
First is the traditional Keynesian vicious cycle: People spend less; therefore, other people and firms have less income, hey, therefore, spend less, leading to less income, and the cycle goes on. That is the mechanism that has been dominant in economists’ thinking about recessions historically.
Larry Summers withdraws name from Fed consideration
Former White House economic adviser and Treasury secretary Lawrence H. Summers has withdrawn his name as a candidate for Federal Reserve chairman, a person familiar with the matter said Sunday.
President Obama had been strongly considering naming Summers to the post after their long experience fighting the financial crisis and recession. The decision may mean that another top candidate, current Federal Reserve vice chairman Janet Yellen, will get the job, or another candidate.
In a letter dated Sunday to the president, Summers wrote that he was withdrawing his name.
“It has been a privilege to work with you since the beginning of your Administration as you led the nation through a severe recession into a sustained economic recovery,” he wrote. “This is a complex moment in our national life. I have reluctantly concluded that any possible confirmation process for me would be acrimonious and would not serve the interest of the Federal Reserve, the Administration, or ultimately, the interests of the nation’s ongoing economic recovery.”
This guy is :
a) either smarter than I though
b) they have something on him that could damage Obama if he was chosen
Why Larry Summers Bailed on the Fed
Late Sunday afternoon, Larry Summers, the presumed frontrunner to replace Ben Bernanke at the Federal Reserve, withdrew his name from consideration in a letter to President Obama. The news came as a shock—but perhaps it shouldn’t have. Although Summers’s combative reputation helped sink his chances, he’s actually been a team player at key points throughout Obama’s presidency.
When Obama passed him over to choose Tim Geithner as Treasury Secretary, Summers accepted a job as director of the National Economic Council that was a step down. When Obama passed him over for Fed chairman and nominated Bernanke to a second term, Summers kept quiet. When it became clear last week that his nomination to succeed Bernanke might not survive the Senate, Summers did the honorable thing and withdrew, sparing Obama from having to expend still more political capital and sparing both of them the embarrassment of a failed vote.
Much of the initial reaction to Summers’s withdrawal focused on his problems with Senate Democrats, three of whom had signaled in recent days that they were going to oppose his nomination. A fourth, Massachusetts Senator Elizabeth Warren, had yet to weigh in publicly but is scheduled to give a big speech on the five-year anniversary of the financial collapse that could have made things even tougher.
But Summers’s real problem was going to be with the GOP: Even if he’d unified Democrats, he’d have needed at least a handful of Republicans to amass a filibuster-proof majority. That may well have proved impossible because Summers’s résumé seems tailor-made to antagonize Republicans. Consider how he embodies nearly every Republican bugaboo:
1. He was president of Harvard, reviled by the right wing as the leading bastion of smug, liberal elitism.
2. He was an architect of the dreaded stimulus, Dodd-Frank, and Obamacare.
3. He supported the auto bailout, the locus classicus of unwarranted state interference in private markets.
4. He’s a defender of “Too Big to Fail” banks (and a paid consultant to one of them), which have drawn growing conservative opposition.
5. He’s flamboyantly arrogant, in the manner that conservatives imagine most liberals to be.
Summers may be a brilliant economist, but even a mediocre one could do the math. Better to withdraw gracefully and preserve the possibility of a role in a future Democratic administration than to risk losing a Senate confirmation vote and see his political career come to a swift and decisive end.
Buffett says Bernanke should stay at Fed
Berkshire Hathaway Chairman Warren Buffett said late Thursday in a TV interview that Fed Chairman Ben Bernanke should be allowed to continue in his role.
“He’s done a terrific job” since the financial panic of 5 years ago, Buffett told CNBC. “I would not trade him away.”
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President Obama signalled earlier this summer that Bernanke didn't want to continue as Fed chairman.
However, the president’s apparent first choice to replace Bernanke, Larry Summers, was effectively rejected by Senate Democrats, who appear to favor Fed Vice Chair Janet Yellen instead. Summers withdrew from consideration on Sunday.
The FOMC’s decision Wednesday not to begin tapering purchases of bonds to boost the economy was seen by many as a sign that Yellen is already exercising more influence over Fed policy.
The Berkshire Hathaway BRK.B +0.40% BRK.A -0.05% executive said in the interview: “I don’t know Yellen at all...I know Bernanke.”
He argued that the Fed will have a tricky job in unwinding the trillions of dollars in assets that have gone onto its books during Bernanke’s tenure and that Bernanke “ought to be given a chance to play the whole game.”
He said that the Fed’s bond purchase program, known as QE3, “hasn’t done the job yet,” and that the economy “just kind of creeps along.”
Of course that Buffet want Bernanke (and he wants him to continue doing what he did yesterday). With each and every day Bernanke is the head of the FED, Buffet (and similar to him) is getting richer and richer and he even does not have to do anything for that
White House Launches Janet Yellen Blitz PR Campaign
There was a time, long ago, when some still believed the myth that the Federal Reserve, and the selection of its Chairman, were supposed to be apolitical and impartial. Luckily, that was a long time ago, because otherwise some may question not only the logic, but the motives, behind what the media reports is an aggressive push by White House officials to "muster support among Democrats on the Senate Banking Committee to back Federal Reserve Vice Chair Janet Yellen," according to Reuters which cited three sources said on Friday, laying the groundwork for her expected nomination to the Fed's top job. If the White House is suddenly intent on picking Mrs. Yellen (or is that Mister?), one wonders just how diluted her "runner up" credibility at the Fed would be, since it has been made quite clear she was continuously Obama's B (or lower) grade choice to head the Fed, with Summers at the very top. And of course, a just as important question is how even more diluted is Obama's credibility and political brand if a few ultra-liberal Senators can impose their choice for next Fed head over that of both Larry Summers, of the "Committee to save the world" and the president himself.