At 8:30 a.m. today, Federal Reserve Chairman Ben Bernanke published his prepared remarks for his 10:00 a.m. testimony to the House Financial Service Committee.
His intention for this was to give Congress plenty of time to formulate some good questions ahead of his appearance.
But was that really a good idea?
UBS’s Art Cashin warns that Bernanke may have set himself up for trouble.
From this morning’s Cashin’s Comments:
Bernanke Testimony – A Surprise Before The Surprises – The multi-decade format of the traditional bi-annual testimony of the Fed Chairman will see a rather significant change this morning. Here is a note that I sent some friends near dawn:
There is a new wrinkle today’s in Humphrey Hawkins format. The House Financial Services Committee has asked for early access to the Bernanke text. It will now be released at 8:30 for the 10:00 a.m. testimony and Q&A. Optimists hope that means more informed questions. Cynics fear election campaign sound bytes. Could make for more surprises.
For the veteran trader’s cynical perspective, let’s turn to my friend, Jim Brown in his Option Investor note this morning:
The Fed is going to release the Bernanke comments at 8:30 with the actual testimony to start at 10:00. I believe this is going to open Bernanke up to an onslaught of pointed questions that could produce some unwanted results.
Remember, Bernanke is assumed to be a lame duck whose term expires on January 31st. He really has nothing to lose by being blunt in his comments over the country’s fiscal problems. He has been blunt in the past about the amount of drag the government is inflicting on the economy. This could turn into a hostile testimony since lawmakers have 90 minutes for their staff to come up with questions designed to embarrass Bernanke and give the lawmaker a sound bite to use in his next election campaign.
The optimists hope the early release will allow the staff to actually read the text and formulate a few meaningful policy questions based on its content. Yeah, I know, it’s Washington but a guy can hope, can’t he?
One other aspect of the early release – the action in the futures and the bond market will tell Bernanke and his staff what aspects the markets are focused on and, thus, he may guide his answers to address that. At any rate, it will be interesting and new.
Bernanke has been all about transparency. Perhaps that was his true intention here.
This is something that couldn’t be said about his predecessor Alan Greenspan.
Here’s High Frequency Economics Jim O’Sullivan: “Mr. Greenspan relished his lack of transparency: “If I seem unduly clear to you, you must have misunderstood what I said.” Chairman Bernanke is more of a straight talker.”
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