Wall Street wants Yellen, not Summers, as next Fed chief - page 4
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The way they are changing favorites every month, it will be Ben again
Bill Clinton Backs Yellen for Fed While Defending Summers's Past
Former President Bill Clinton said Janet Yellen would be “great” as the next chairman of the Federal Reserve and defended Larry Summers, who withdrew his name from consideration amid lawmaker opposition.
“I also consider Janet Yellen a friend and I think she has shown good judgment,” Clinton said in an interview on CNN’s “Fareed Zakaria GPS,” scheduled to air tomorrow. “She’s been right on everything that’s happened in this whole aftermath of the financial crisis. So if she gets the job, I’ll be thrilled, too.”
The likelihood of Yellen, 67, replacing Ben S. Bernanke as Fed chief has increased as White House officials began gauging lawmakers’ support and she won the backing of a top Senate Democrat. She currently is vice chairman of the Fed, where Clinton said she’s “done a fabulous job.”
Senator Charles Schumer of New York, the chamber’s No. 3 Democrat and a senior member of the Banking Committee, said Sept. 18 that Yellen would be an “excellent choice” to succeed Bernanke when his term expires on Jan. 31.
Clinton defended Summers, who served under his administration as Treasury secretary from 1999 to 2001. Summers withdrew his name from consideration as Fed chairman following opposition from some Democrats, women’s groups and other advocacy organizations against his potential nomination.
“I think there’s this kind of cartoon image that’s been developed that somehow Larry Summers was a one-note Johnny, just trying to let big financial titans ravage the land,” Clinton said. “It’s just ludicrous.”
Summers served as director of the National Economic Council for President Barack Obama from January 2009 until November 2010.
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Fed Faces New Era of Thinking Global as Yellen Nomination Nears
At the height of the 1998 Asian economic crisis, then-Federal Reserve Chairman Alan Greenspan declared the U.S. was no “oasis of prosperity” in times of global stress.
It is a lesson Ben S. Bernanke’s successor will need to heed upon inheriting a central bank once again facing a domestic need to think internationally.
For five years, the Fed has focused on home-grown challenges, including financial turmoil and the recession and surge in unemployment that resulted. The biggest threat to U.S. expansion under its next chairman may lie outside its borders as China and fellow emerging markets show signs of weakening.
Vice Chairman Janet Yellen is the top candidate to replace Bernanke if he steps down in January, and then would become the top monetary-policy maker as markets open wider for trade and finance and regulators seek more cross-border coordination in monitoring banks.
“The U.S. is becoming somewhat more dependent on what’s going on in the rest of the world,” said Nathan Sheets, the former head of the Fed’s international-finance division and now global head of international economics at Citigroup Inc. in New York. “For Fed policy makers, the U.S. is becoming much more closely integrated with the global economy.”
That shouldn’t prove a problem for Yellen. She has been globe trotting and crisis fighting at the Fed from Washington since 2010, helping to craft bond-buying and communication policies. As president of the Federal Reserve Bank of San Francisco in the six previous years, she monitored Asia and oversaw banks with foreign exposure, including Wells Fargo & Co. (WFC)
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Obama to name Yellen as next Fed chair
President Barack Obama will nominate Federal Reserve Vice Chair Janet Yellen to be the next head of the U.S. central bank on Wednesday, putting her on course to be the first woman to lead the institution in its 100-year history.
Yellen, who would replace Ben Bernanke when his second term as Fed chairman expires on January 31, has been a forceful advocate for aggressive action to stimulate U.S. economic growth through low interest rates and large-scale bond purchases.
If confirmed by the U.S. Senate, she would provide continuity with the policies the Fed has established under Bernanke and would be expected to tread carefully in winding down the extraordinary stimulus the central bank put in place to shore up the world's largest economy.
Her nomination comes during a political stalemate in Washington that has closed the U.S. government and threatened a U.S. default if lawmakers fail to raise the debt ceiling by an October 17 deadline.
"Thank God Yellen will be nominated under the current circumstances. You don't want a change at the central bank right now," said Dan Fuss, a portfolio manager at Loomis Sayles in Boston. "This Yellen news is one uncertainty lifted from already nervous markets."
U.S. stock index futures rose and the dollar slipped against the euro on the news of Yellen's pending nomination.
If she wins the Senate's backing, as expected, she would join the Fed's honor roll along with such household names as Paul Volcker and Alan Greenspan, predecessors as head of an institution that can influence the course of the world economy.
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With The US Debt X-Date Just One Week Away, At Least Continuity At The Fed Is Preserv
For all expectations of a big jump in US futures overnight on the largely priced in Janet Yellen nomination announcement which is due at 3 pm today, the move so far has been very much contained, as expected, with a modest 90 minute halflife, as the markets' prevailing concern continues to be whether the debt ceiling negotiation will be concluded by the October 17 deadline or if it would stretch further forcing the government to prioritize payments. There is however some hope with Bloomberg reporting that some possible paths out of the debt impasse are starting to emerge with less than a week before U.S. borrowing authority lapses after Obama said he could accept a short-term debt-limit increase without policy conditions that set the terms for future talks. Whether this materializes or just leads to more empty posturing and televized press conferences is unclear, although as Politico reports, the stakes for republicans are getting increasingly nebulous with some saying they are "losing" the fight, while the core GDP constituency is actually liking the government shutdown.
Looking at global markets, as RanSquawk reports, in Early European trade stocks were seen in minor positive territory across the board amid Italian and Spanish bond syndications which is expected to draw in a respectable level of demand, with FTSE MIB and IBEX 35 leading the way for European equities. In addition there is more of a risk on sentiment as equities begin to pare back some of yesterday's lows. However, they still remain short of the highs reached on Monday.
In terms of overnight news, one of the most crucial developments has been the news that the White House have said that President Obama is set to announce Janet Yellen as the next Fed chair later today. T-notes initially saw upside following this news, however, this move was later pared. Fixed income markets have been seen higher across the board as UK Gilts provide direction for the market following a weaker than expected release for production figures and a larger than expected UK trade deficit. The news resulted in 6-week lows in UK 10yr yields with bund futures rising in sympathy.
Courtesy of the government shutdown, today the only events on the docket are the MBA mortgage apps at 7 am, and the FOMC Minutes release for the "no Taper" decision meeting at 2 pm Eastern.
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Obama picks Yellen for top Fed job, urges quick Senate approval
President Barack Obama nominated Federal Reserve Vice Chair Janet Yellen on Wednesday to run the world's most influential central bank and urged the Senate to confirm her without delay.
Yellen, an advocate for aggressive action to stimulate U.S. economic growth through low interest rates and large-scale bond purchases, would replace Fed Chairman Ben Bernanke, whose second term ends on January 31.
The nomination will put Yellen on course to be the first woman to lead the institution and the first to head a central bank in any Group of Seven industrial nation.
"Janet is exceptionally well qualified for this role," Obama said at a White House ceremony, with a beaming Yellen standing by his side. "She doesn't have a crystal ball, but what she does have is a keen understanding about how markets and the economy work, not just in theory but also in the real world. And she calls it like she sees it."
If confirmed by the U.S. Senate, which is expected to endorse her despite opposition from some Republicans, Yellen would provide continuity with policies under Bernanke. She would likely move cautiously in reining in monetary stimulus put in place to shore up the world's largest economy.
Yellen, who spoke briefly after Obama, said she would promote maximum employment, stable prices, and a sound financial system.
She said there was more to do to ensure people who were out of work can find jobs.
"While we have made progress, we have farther to go. The mandate of the Federal Reserve is to serve all the American people, and too many Americans still can't find a job and worry how they'll pay their bills and provide for their families," Yellen said.
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Yellin' for Yellen: We Must Have Fallen Asleep And Woken Up In 2006
After reading the coverage of Janet Yellen’s Fed Chair nomination yesterday, it feels as though it’s 2006 all over again. Confidence in our central bankers seems to be approaching all-time highs, little more than five years after it collapsed alongside the financial sector. Justin Wolfers’ endorsement of Yellen was typical:
With such enthusiasm on display, it’s worth turning back the clock and remembering attitudes about Fed leadership in the Alan Greenspan era. Here’s an example from outgoing Chairman Ben Bernanke’s legendary idol, Milton Friedman, writing in 2003 (emphasis mine): And here’s Bernanke in 2004, concluding a speech about the so-called Great Moderation: We heard sentiments such as these repeatedly until 2008. Outside of recessions and financial crises, economists have shown a habit of complementing the Fed’s leaders (self-congratulations for those at the Fed), while they rally around the story that contemporary policies are:read more ...
We all live in a Yellen submarine
We all live in a Yellen submarine. Since the dovish central banker became the putative front-runner in the race to lead the Federal Reserve, fears about the debt ceiling debacle have been submerged under the expectation that cheap liquidity would continue to flow into the financial markets.
Today, this dynamic is receiving additional momentum from signs that a resolution to the crisis may be imminent. In a meeting last night, Republicans and Democrats moved toward a compromise that would allow the American government to continue borrowing into November – allowing the two parties to work out a grand bargain without triggering a disastrous outcome.
Equity indices are flirting with all-time highs and safe haven currencies are coming under pressure as traders purchase economically-sensitive assets around the world. The dollar and the euro are up against the yen, while West Texas tea is trading hands near the $101 mark. The commodity complex is generally receiving lift, with Doctor Copper reversing some of its recent losses, reflecting a broader sense of global economic optimism. The Canadian dollar is the outlier, remaining on the wrong end of the trading stick, weighed down by economic performance concerns.
For now, this sense of optimism seems well-justified. The financial system is caught in a ‘Goldilocks’ moment, with economic activity unlikely to accelerate enough to shut the taps at the Fed, while the political risk premia currently attached to the Treasury market will almost certainly disappear before the end of the month. The market porridge isn’t too hot, and it isn’t too cold – it’s just right.
However, this isn’t likely to last – the taper isn’t vapor. Barring an unforeseen disaster, tightening fears will return in the coming months. As Raghuram Rajan, India’s new central banker put it recently – “Let us remember that postponement of tapering is only that – a postponement… Let’s not lose the chance, the warning that we have been given, because this is going to come back and what we need to do is put our house in order before.”
For Canadian dollar sellers, today’s opportunities are likely to be fleeting – limit orders and future-dated positions should be placed at relatively conservative levels. US dollar sellers may see further gains in the weeks to come, meaning that legging trades in across a broader range should help to optimize execution levels. This weekend will quite likely bring a break of the current trading range and liquidity will begin to collapse after noon, implying that orders should be discussed this morning.
Happy trading – and have a great weekend!
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Janet Yellen Exposed - The Truth Behind The Myth
When President Obama nominated Janet Yellen to be the next Chair of the Federal Reserve Board the praise he offered was similar to what had already poured in from around the country. In their assessments of Ms. Yellen's long career, Congressman, editors, and academics have underscored how her prescience and caution distinguish her from the reckless overconfidence that have plagued her male colleagues at the Federal Reserve. As proof of her wisdom supporters have pointed to speeches she delivered in 2005 and 2006 in which she supposedly issued clear warnings about the dangers then building in the frothy real estate markets. Without any attempt at reasonable fact checking, these claims have been parroted by the media.
However, a brief review of the speeches in question reveals that she issued no such warnings at that time.
In a new video, Peter Schiff, the CEO of Euro Pacific Capital and a well-known author and economist, goes over the speeches in question and comes to the easy conclusion that the new leader at the Federal Reserve is just as incapable as her predecessors of recognizing a dangerous asset bubble. Worse yet, as a diehard believer in the power of expansive monetary policy, Ms. Yellen would be much less likely to attack an asset bubble even if she were ever to recognize one before it burst.
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Rand Paul’s Threat to Block Yellen Nomination Kicks Us All in the Gut: David Kotok
Kentucky Republican Senator Rand Paul is threatening to put a hold on the nomination of Janet Yellen for Federal Reserve chair, CNBC is reporting, based on a source close to the lawmaker.
The formal hold would be put in place next week when the Senate is back in session.
Paul is insisting on a vote on his Fed transparency bill. According to CNBC’s Steve Liesman, some sort of hold from Paul “was sort of expected,” but it was not expected to be tied to Paul’s Fed transparency bill.
In the above video, Cumberland Advisors' David Kotok expresses his outrage over Paul's move.
"Senator Rand Paul has just kicked every man and woman, investor, 401k-owner, IRA-owner, businessperson, borrower in the gut," the chief investment officer tells The Daily Ticker. “The Federal Reserve needs consistent policy – get off their back, Senator Paul! You are doing a disservice to the United States of America.”
CNBC reports Sen. Paul would need 40 other senators to join him to cut off a motion to bring the nomination to the floor, and that Senate leadership is confident Yellen’s nomination will succeed (citing a Democratic aide).
This sentiment echoes the conventional wisdom – even from a lawmaker that formerly voted against Yellen’s nomination to join the Fed board - that the current Fed vice chair will be easily confirmed. Ben Bernanke’s term as Fed chair expires January 31, 2014. Reuters reports Yellen's confirmation hearing is not likely to get underway before mid-November.
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