Business

Can’t bitch about these Jackson Hole odds

You can take this to the bank.

When a gang of Federal Reserve officials meets at the end of this week in Jackson Hole, Wyo., somebody there will say something that will disturb, or overjoy, Wall Street.

But who will it be?

With the financial markets extremely nervous, I thought I’d get a jump on the conference by digging a little hole of my own with some predictions.

Fed chief Ben Bernanke won’t be at the three-day conference, because he’s having his teeth cleaned, or doing something equally important.

So without a logical Fed mouthpiece (clean teeth or not) on location, there could be a lot of people who will be vying for the glory of being quoted.

(For 20 bucks, I’ll quote them right here, and 50 will get them a picture with the quote.)

The topic on everyone’s lips will be quantitative easing, the Fed’s crazy money-printing operation. The extra trillions in digital currency are being used to buy government bonds and mortgage-backed securities in an effort to keep interest rates artificially low.

You met my dog, Daisy (that’s her I’m consulting with at the upper left), in last Thursday’s column, when she and I presciently warned that the stock market was about to have trouble. We even handicapped events that might cause the next disaster.

The day that column ran, the Dow Jones industrial average declined more than 225 points, and it has been retreating ever since.

And interest rates also continue to rise without the Fed’s permission, a rebellion in bonds that could be the biggest news as we head toward Wall Street’s traditional October crash-iversary. (Happy 1929, 1987, 1989, etc.!)

Well, Daisy had so much fun that she wanted to do it again. But this time we’ll give odds on the Fed official (attending Jackson Hole or not) who is most likely to catch the market’s attention before, during and after the big conclave.

*William Dudley, head of the New York Fed and permanently on the Fed’s policymaking Open Market Committee, should be in attendance at Jackson Hole.

Dudley has been completely mum ever since he got savaged for saying in 2011 that inflation was low because iPad prices were falling. It’s a 1,000-to-1 shot that Dudley will open his mouth publicly ever again.

But Dudley’s a tool of the financial community and will probably speak up in favor of QE in private if Wall Street tells him to.

*Esther George, FOMC member who has been voting against QE for some time. 100-to-1 chance she’ll become a dove and start supporting QE now when everyone else is turning against it. Doubtful for Jackson Hole.

*Eric Rosengren, head of Boston Fed who now votes on the FOMC. He has been a big supporter of QE, which isn’t surprising since his district is a financial center.

But lately Rosengren, who has been vocal, has been toughening his position, and he recently said it might make sense to pare back QE in a few months. Another 100-to-1 shot that he’ll say anything that anyone cares about, because he reverts back to nonvoting status at the Fed in 2014.

*Richard Fisher and Charles
Plosser, head of the Dallas and Philadelphia Feds, respectively. Fisher hates QE as much as I do, and Plosser is getting there. Fisher isn’t supposed to be in Jackson Hole; Plosser is.

Neither Fisher nor Plosser has a vote on the FOMC at the moment, but both will vote next year. If either shifts position on QE — softening in favor of it or downright hating it — that would be shocking news.

Daisy and I think there’s a 10-to-1 possibility that Plosser becomes more staunchly against QE.

* Janet Yellen, vice chair of the Fed and possible successor to Bernanke. She’ll be at Jackson Hole, but nobody cares what she thinks or says. That’s also her problem in securing the Fed’s top job. 100-to-1 shot she can move the markets.

Thanks for reading this far. Now I’m going to tell you the truth.

There are two punch lines to this column. One, any opinions expressed by any Fed officials in Jackson Hole or anywhere else really don’t matter until President Obama decides who is going to run the Fed once Bernanke is tossed next year.

Larry Summers, a perennial candidate for everything, including the Nathan’s Hot Dog Eating Contest, seems the most likely pick as Fed chairman.

But until we really, really know what Summers thinks about QE, we won’t know nothin’. Summers has been offering his opinions delicately up until now because if his chatter happens to crash the stock market, he’ll disqualify himself from the Fed job he desperately wants.

This is the second punch line:

Even if the Fed wants to taper QE, it probably won’t be able to, as even a hint of its end could send financial markets around the world into fits. And the Fed can’t afford to let that happen.

Here’s an easier prediction to make: You won’t be hearing from Daisy anymore. There’s a saying in show biz that you should never work with kids or animals.

Daisy’s been demanding equal treatment (check her picture up there again) — and money! The dog says she’s worth at least as much as Jim Cramer because, to paraphrase Babe Ruth, she’s had a better year at predicting the markets than the CNBC wise guy.

Back to your cage, girl. Let’s see if your head still fits through the opening.