Market chatter from Deutsche Bank

Nicolas Goetzmann sent me the following report from Deutsche Bank:

The FOMC’s meeting will also be a key event to watch today after some market chatter yesterday of the possibility of changing the extended period language into nominal GDP targeting. For the record, DB’s Peter Hooper noted that the Fed will have no inclination to make any notable changes today following the QE3 announcement last month. Maintaining a low profile given the upcoming Presidential election is also a reason for keeping the status quo intact.

And I was also intrigued by this:

While on the subject of the FOMC, the New York Times reported that Ben Bernanke will not stand for a third term even if President Obama wins the November 6th election. Bernanke’s current terms ends on Jan 2014. The news didn’t help gold prices, which finished 1.21% lower, in its largest one-day loss since July 10th.

Stocks also fell yesterday, although I have no evidence that the Bernanke news played a role.



15 Responses to “Market chatter from Deutsche Bank”

  1. Gravatar of Saturos Saturos
    24. October 2012 at 11:36

    Stocks have been doing quite poorly recently, haven’t they…

    In other news:

    The Bretton Woods transcripts – out at last

  2. Gravatar of PrometheeFeu PrometheeFeu
    24. October 2012 at 14:21


    I don’t know if there is any way for you to decide which ads will show under your posts, but you might want to have a look. I mean, those guys are nuts and every once in a while I click on it thinking you posted it only to be confronted with apocalyptic visions which can only be remedied by the purchase of gold or alternatively this simple financial plan for the low-low price of 129.99 or whatever.

  3. Gravatar of Morgan Warstler Morgan Warstler
    24. October 2012 at 14:41

    China has decided to become Republican.

  4. Gravatar of ssumner ssumner
    24. October 2012 at 16:12

    Saturos, Yes, stocks have been doing poorly. But surely this isn’t a big surprise.

    Thanks for the Bretton Woods link. One of the authors also sent that to me.

    PrometheeFeu, The ads each person sees are tailored to their interests. Each person sees different ads.

    Morgna, I’m also seeing reports like that. I don’t know if it’s true, but surely it’s only a matter of time. China wants to be a great nation—you don’t get there with the economy dominated by SOEs.

  5. Gravatar of Benjamin Cole Benjamin Cole
    24. October 2012 at 20:03

    on China: There has been a lot of chatter also in the opposite direction. That CCP-owned or controlled industries are ever-more deeply entrenching themselves into the economy. Even private companies in China, listed on the exchanges, have board seats controlled by the CCP, and thus they control the private-sector company.

    I live in Thailand now, and there is guy here named “Crutch” who writes for the newspaper in Bangkok. He says after 40 years in Thailand, he still doesn’t understand the country. We are about 60 million people here, not 1.2 billion.

    I asked Crutch why are major Thai business reporting labor shortages—they report they can’t find the Burmese and Cambodians they have been using to fill lower slots, since there are not enough Thais to begin with. He answers, “See? Labor shortages in Thailand? Who knew?”

    My one small corner of the country is showing excellent growth, judging from construction (Pak Chong). Two large malls are up or going up. 10 years ago everyone was on motorcycles (entire families), and now everyone has a pick-up truck, or seems like it.

    Beware of assuming anything about China (or even Thailand).

    Can anyone predict if the USA will become less or more regulated in 10 years? 20 years?

    Yeah, I can’t make even that prediction, and I lived in the USA more than 50 years as born citizen, student, news reporter, lobbyist, author, blogger etc etc etc. Even the expression “more or less regulated” is confounded by state, local and national jurisdictions. Building a condo sky rise in Newport Beach CA is impossible.

    China may become more regulated on environmental matters—more state control, not less. Or more controlled about sexism in the workplace. Or maybe not.

    Making predictions on China?

    “Making predictions is very hard, especially about the future”–not Yogi Berra, but Casey Stengel (Scott Sumner will get it).

  6. Gravatar of Saturos Saturos
    24. October 2012 at 20:33

    The Fed holds its communications policy constant:

  7. Gravatar of Saturos Saturos
    24. October 2012 at 20:47

    On China, there’s also this:

  8. Gravatar of Saturos Saturos
    24. October 2012 at 21:09

    Can Panama become the next Hong-Kong?

    And this is simply awesome:

  9. Gravatar of Saturos Saturos
    24. October 2012 at 21:18

    Mark Thoma gave this lecture on monetary policy to his class on Tuesay:

  10. Gravatar of Saturos Saturos
    24. October 2012 at 23:56

    New paper on financial crises and unemployment (HT Free Exchange):

  11. Gravatar of Bonnie Bonnie
    25. October 2012 at 06:11

    I read an article on CNBC yesterday speculating that a Romney win means Glenn Hubbard as Fed Chairman and a hawkish Fed. It went farther to discuss whether Romney would try to force Bernanke to resign to install Hubbard earlier. A line from it says that market participants are pulling in higher interest rate expectations from the future. It’s hard to tell if that is just election spin or if those are real rumors going around the markets. If it is true, Romney’s hawk-talk is already doing damage. He needs to dump Hubbard and start talking about appointing Scott Sumner as Fed Chair. 🙂

  12. Gravatar of Saturos Saturos
    25. October 2012 at 08:05

    Bonnie, I would see higher interest rate expectations as a good thing. As would David Beckworth:

  13. Gravatar of Patrick R. Sullivan Patrick R. Sullivan
    25. October 2012 at 08:36

    Saturos, that Columbia paper is interesting, and this should make the Housing Cause Denialists squirm;

    ‘Following a disruption in credit markets, collateral requirements drastically change and loans are biased towards projects and firms possessing easily recognizable collateral, associated with tangible assets, which we define as “intrinsic collateral” (Calvo (2011)).

    ‘ …. we use data on asset prices, in particular stock market prices and house prices, as proxy for collateral values, and we find that collateral variables have a significant impact on unemployment during the recovery phase.’

  14. Gravatar of Patrick R. Sullivan Patrick R. Sullivan
    25. October 2012 at 13:11

    Near the end of the Calvo, Coricelli and Ottonello paper;

    ‘The evidence reported in the paper suggests that a sharp dosage of price inflation for a limited period of
    time may go a long way to restoring full employment after financial crises, albeit at the cost of lower real
    wages. One should note, however, that in the average high-inflation EM [emerging market] episode covered by our sample, inflation spiked up at the beginning of those episodes but later subsided, and did not result in permanently higher inflation.’

    Not exactly a ringing refutation of Market Monetarism.

  15. Gravatar of Scott Sumner Scott Sumner
    26. October 2012 at 04:31

    Patrick and Saturos, Thanks, I have a new post on that.

    Saturos, Interesting article on Panama. China does seem to be recovering from the devastating 7.4% growth “hard landing.” Next year I’ll do another of my annual “apocalypse later” posts, mocking those who keep predicting a China crash.

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