The quiet summer is about to give way to a three week period that will settle a lot of things. Consider:
• Right now the odds of Obama winning the election are 56% on Intrade. According to Gallup, his approval rating is still below 50%. So Obama does not have a comfortable lead. This week is the Republican convention began. A week later is the Democratic convention. If history is a guide a week after the last convention expect to see one of the candidates take a commanding lead in the polls.
• August 31 Bernanke speaks in Jackson Hole. The Federal Reserve always tells us nothing of policy substance will be in the speech. Last year Bernanke laid out Operation Twist and two years ago he laid out QE2. So, we’ll see.
• On September 6 the ECB governing council meets. Draghi was expected to detail his “whatever it takes” bond purchase program. But, now stories say he might be put on hold until September 12 (below).
• On September 7 the always-important payroll report will be released.
• On September 12 the German court rules on the constitutionality of the eurozone’s permanent rescue fund. This ruling is critical to Europe.
• On September 12 the Dutch election could have big implications on all of Europe, as noted above.
• The September 12/13 FOMC meeting is shaping up as the make-or-break moment for QE3. At this meeting the FOMC members update their forecasts and Bernanke holds a press conference. These events lend themselves well to policy changes (adding QE3), which is another reason many expect action at this meeting. Additionally, the next meeting is not until late October and that is perceived to be too close to the election.
So on September 14 we will know a lot more than we know now. This is the anniversary of the Lehman bankruptcy and if the markets disappoint we can re-run that event a few weeks before an election all over again!
Category: Think Tank
Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.