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Post by jeffolie on Jul 26, 2013 12:59:14 GMT -6
Wall Street wants Yellen, not Summers, as next Fed chief 26 Jul 2013 Wall Street overwhelmingly believes President Obama will and should pick Janet Yellen to be the next chairman of the Federal Reserve, according to a survey. Preliminary results of the CNBC Fed Survey for July show 70 percent of the 40 participants who responded believe Obama will pick Yellen, currently, the Fed's vice chair, to replace current Chairman Ben Bernanke, whose term is up in January. Just 25 percent believe it will be the former Treasury Secretary Larry Summers. (Read more: Battle of the sexes in choice for new Fed leader) Yellen also beats Summers when CNBC asks participants who the president should nominate, with 50 percent choosing Yellen and 12.5 percent saying he should reappoint Bernanke. Even write-in candidate John Taylor, the Stanford University president, beats out Summers on who the president should nominate. Play VideoBattle for Bernanke's seat Who will take over as the next Fed head after Ben Bernanke? CNBC's Steve Liesman digs into the preliminary results of CNBC's July Fed survey to get a feel for the President's pick. Participants, who include economists, traders and strategists, say monetary policy expertise is the most important quality for a new Fed chairman. Among the 10 qualities asked about, the ability to manage a financial crisis ranked second and good communications skills was third followed by respect from financial markets and concern about inflation. Asked to judge the two supposed front-runners on these qualities, Yellen beat Summers in seven of 10 categories, including four of the top five. In fact, Yellen got much higher grades from the Street on monetary policy expertise and concern about unemployment, which is a major issue for President Obama. Summers is seen having more respect from international leaders, greater concern about inflation and a higher level of financial market expertise. Wall Street, however, doesn't think the next Fed chairman will be all that different from Ben Bernanke. Fifty-five percent said whomever is chosen will be neither more hawkish nor more dovish than Bernanke on monetary policy. The complete results of this month's Fed Survey will be released Tuesday morning. Who should Obama nominate for Fed chairman? Janet Yellen 50.0% Ben Bernanke 12.5% John Taylor 12.5% Glenn Hubbard 7.5% Roger Ferguson 5.0% Larry Summers 2.5% Martin Feldstein 2.5% Paul Volcker 2.5% Steve Liesman 2.5% Don't know/unsure 2.5% Alan Krueger 0.0% Christine Romer 0.0% Source: CNBC Fed Survey www.cnbc.com/id/100917426
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Post by jeffolie on Jul 26, 2013 13:14:28 GMT -6
Larry Summers and the Pivot to Austerity by Bill McBride on 7/25/2013 Just a thought, I haven't seen any discussion on this ... the pivot to austerity in early 2010 is widely viewed as a major mistake (as opposed to staying focused on employment). Larry Summers was the Director of the National Economic Council until December 2010, so he probably played a key role in the austerity pivot. In 2010, Fed Chairman Ben Bernanke was already warning about premature tightening: "Economic conditions provide little scope for reducing deficits significantly further over the next year or two; indeed, premature fiscal tightening could put the recovery at risk. Over the medium- and long-term, however, the story is quite different." This has been a familiar comment from Bernanke over the last few years: less austerity now, and put the long run deficit on a sustainable path. Unfortunately this advice has fallen on deaf ears. A key question for Mr. Summers is what role he played in the premature pivot to austerity. Also, from FT Alphaville: Larry Summers on QE Lawrence Summers made dismissive remarks about the effectiveness of quantitative easing at a conference in April, raising the possibility of a big shift in US monetary policy if he becomes chairman of the Federal Reserve. ... the people who have discussed policy with him say Mr Summers regards fiscal policy as a more effective tool than monetary policy. “More of what will determine things going forward will have to do with fiscal policy and that there is less efficacy from quantitative easing than is supposed,” he said in his Santa Monica remarks. Read more at www.calculatedriskblog.com/#eubJEwh2QmHdp8uI.99
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Post by jeffolie on Jul 26, 2013 13:34:41 GMT -6
Why the bond market hates Summers as next Fed chief The leak that Larry Summers is a front-runner to be Fed chairman has prompted outrage in a number of places -- including the bond market. No decision on new Fed chair until fall: reports The emergence of Larry Summers as a top candidate for Federal Reserve chairman has had an understated impact on the bond market. It gave Treasurys a push lower on Wednesday and much of Thursday, but didn’t provide the market with the immediate jolt that often comes with Fed-related news. Instead, it has added a sense of foreboding about the great unknown. “The next big move in the bond market will be when President Obama appoints the new chairman of the Federal Reserve board,” said Tom Di Galoma, senior vice president of fixed-income-rates trading at ED&F Man Capital Markets, via email. Summers, the former U.S. Treasury Secretary, is seen as competing against Fed Vice Chair Janet Yellen for the top post once Chairman Ben Bernanke’s term ends in January. Other candidates could be in the mix, and a decision isn’t expected until fall. But if Summers gets the post, the bond market is bracing for higher volatility and higher yields. Joseph LaVorgna, chief U.S. economist at Deutsche Bank, said as much in a Tweet Friday morning: Yellen is often seen as the second incarnation of Bernanke: equally dovish and committed to maintaining the current pace of monetary policy. Summers, on the other hand, is a wild card. “Summers would likely be seen as relatively dovish and wouldn’t come in and slow the economy,” said Michael Pond, head of global inflation-linked research at Barclays. (Read more in Thursday’s Bond Report.) “But he is probably seen as less dovish than Yellen and there’s less clarity around his views than hers.” Reuters Ben Bernanke How much less dovish would he be? That’s unknown, but one clue comes from the fact that he recently said he had doubts about whether the central bank’s asset purchases, known as quantitative easing, are helping the economy, according to a Financial Times report Thursday. ”QE in my view is less efficacious for the real economy than most people suppose,” Summers reportedly said. For the bond market, that has stoked fears of less commitment to the Fed’s current policies. And that could mean a hike in the Fed’s short-term interest rates earlier than is priced in under a Yellen chairmanship. For a bond market that is already on edge over the pace and timing of a scale-back in the Fed’s bond-purchase program, that could add bearish momentum. Questions about what monetary policy would look like under Summers don’t have any immediate answers. So the market is looking further down the road to how a Summers appointment would impact the timing of an increase in short-term interest rates. “I think it’s really a question of the timing of the rate hike,” said David Keeble, head of interest-rate strategy at Crédit Agricole Corporate and Investment Bank. ”It’s a two, three, four year maturity type of discussion you should be having with clients. Not, ‘is the Fed going to stop buying?’” blogs.marketwatch.com/thetell/2013/07/26/why-the-bond-market-hates-larry-summers/?mod=MW_home_latest_news
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Post by jeffolie on Jul 26, 2013 15:08:27 GMT -6
Obama Said Not Ready to Decide on Fed Chief for Several Weeks Jul 26, 2013 President Barack Obama won’t announce a replacement for Federal Reserve Chairman Ben S. Bernanke at least until September, according to an administration official. Obama hasn’t made a decision on naming the next Fed chief, according to the official, who asked for anonymity to discuss internal planning. July 26 (Bloomberg) -- House Democratic Leader Nancy Pelosi says "it would be great to have a woman" to lead the Federal Reserve. Fed Vice Chairman Janet Yellen is "extremely talented," the California congresswoman said in an interview airing this weekend on Bloomberg Television’s "Political Capital with Al Hunt." (This is an excerpt. Source: Bloomberg) . Bernanke, whose second four-year term expires Jan. 31, hasn’t indicated whether he would seek or accept a third term. Obama said last month that the Fed chairman has stayed in the post “longer than he wanted.” The Associated Press reported the timing earlier today. About a third of the Democrats in the U.S. Senate have signed a letter pressing Obama to nominate Fed Vice Chairman Janet Yellen for the post. While the letter doesn’t name any other candidate, former Treasury Secretary Lawrence Summers is another potential nominee. www.bloomberg.com/news/2013-07-26/obama-said-not-ready-to-decide-on-fed-chief-for-several-weeks.html
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Post by jeffolie on Jul 27, 2013 16:02:55 GMT -6
In Fed chair race, Obama's loyalty to Summers could be key 27 Jul 2013 The oh-so-subtle behind-the-scenes battle to succeed Ben Bernanke as chairman of the Federal Reserve could come down to something as simple as a conference call. When candidate Barack Obama was prepping for a crucial meeting in 2008 with President George Bush and his GOP rival, John McCain, in the thick of the fiscal crisis, Larry Summers took a lead role prepping the candidate on urgent economic issues. The meeting proved a turning point for Obama's campaign as he pulled away from Bush in the polls. Subsequently, Summers was joined by heavyweights Robert Rubin and Warren Buffett on semiregular calls with Obama about the economy. Not on the calls: Janet Yellen, the other presumed candidate for Fed chair. As a consummate Washington insider, Summers knows that face time with a presidential candidate—especially one grappling with a crisis—is second in value only to face time with a sitting president. And once he got an office in the West Wing after Obama's 2009 swearing in, Summers had that, too. But in the years Summers sat just one floor away from the president at 1600 Pennsylvania Ave., Janet Yellen was president of the San Francisco Fed—a job that doesn't come with a White House hard pass. Today, she's the vice chair of the Fed Board of Governors, a job description that does not require frequent visits to the Oval Office. Several former White House insiders say that's the key difference between Summers and Yellen in the jousting for Bernanke's big chair: Obama knows Summers and trusts his judgment, and he doesn't have much of a relationship with Yellen. (Read more: Obama likely won't announce Fed chair pick until fall) Play Video'Summers' time at the Fed? There has a been strong reaction to the idea of Larry Summers replacing Ben Bernanke at the fed. Janet Yellen is also a front runner for the role and a favorite of the Street's elite. CNBC's Steve Liesman, Rick Santelli, and Eamon Javers discuss."While economists are famous for 'on-the-one-hand this, on-the-other-hand-that,' Larry's given the president a lot of definitive advice," said one veteran of the Obama White House. "He has a high comfort level with Larry and a lot of faith in Larry's take."
That's not to say that the president is unaware of the rockier moments in Summers' history—his controversial 2005 comments on women in the sciences, or his sharp-elbowed style of bureaucratic infighting in Washington. But Obama discounts them. "To the extent that Larry comes with baggage, it was pre-NEC baggage," said another former White House insider, referring to Summers' tenure as Obama's chair of the National Economic Council. "Working closely together for years tends to exorcise those demons." Even former White House insiders who think Summers will get the nod acknowledge that his sometimes brusque personal style could play poorly at a high-profile, Bernanke-style Fed press conference. "In some ways, he's not perfectly suited in terms of the communications element of the job," said the former insider. "With one poorly chosen adjective, you could shave 500 points off the Dow." That's one reason a Senate confirmation hearing for Summers, this person said, would be "rancorous."
(Read more: Wall Street wants Yellen, not Summers, as next Fed chief) Still, the insider said the president has been thinking of Summers as Fed chair for a long time. "This is something they talked about way back in the day," the person said. "There wasn't a promise of a job, but in the course of their years working together Larry expressed interest in the job. Loyalty does mean something." Obama is assessing all that as he makes his decision, which White House officials say isn't likely to come until the fall. "If the president appoints Summers, it's because the president judges that he's mature enough not to bring this baggage with him," said the first insider. A third former Obama White House insider says Summers' insider status is magnified by the fact that many Obama advisors weighing in on the decision owe their own jobs or career advancement to Summers. " It just feels weird," said the insider. "It does seem to be a system built for identifying Larry as the pick." www.cnbc.com/id/100917425
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