Earlier this morning, European Central Bank president Mario Draghi unexpectedly announced that he wouldn’t be heading to the Kansas City Fed’s event at Jackson Hole, Wyoming.But Art Cashin isn’t too surprised. In fact, Draghi didn’t have much choice.
From this morning’s Cashin’s Comments (emphasis ours):
Draghi Defers – ECB head, Mario Draghi, has withdrawn as a speaker at Jackson Hole. That is logical and almost inevitable.
As I told Bob Pisani yesterday in our daily CNBC website interview, Draghi would have been gagged by circumstances and politics. He could not afford to outshine Bernanke.
Jackson Hole is primarily a Fed/Bernanke event. As I noted to Becky Quick this morning, you don’t go to your best friend’s daughter’s wedding and upstage him at the event. So that left Draghi in a position to be dry, professorial even purposely boring, lest he steal the spotlight from the host.
But, on the other hand, the world has been waiting for weeks to get details behind his assertion that he would “do what is necessary. And it will be enough”. A vacuous speech wouldn’t do, either.
That made Draghi’s Jackson Hole position untenable. He dare not steal the spotlight but he could not be bland and vague. So he withdrew.
One other factor is next week’s ECB meeting. Draghi dare not say something that might complicate negotiations within the ECB (whose statement will not be postponeable).
Despite the clear motivation of Draghi to withdrew and avoid unnecessary complications, markets are looking for conspiracies. On the announcement, the Euro and EU markets spiked a bit. The theory behind that spike is too complicated to explain in this space.