Jackson Hole 2012

Jackson Hole Speech

This year’s annual Jackson Hole Economic Symposium will be held from August 30th to September 1st. Head of the Fed, Ben Bernanke, will give his annual speech at 10 AM August 31st. The Jackson Hole symposium has become very important for traders and investors alike in recent years due to the important announcements that have been made during this conference. At the 2010 Jackson Hole Symposium Ben Bernanke pre announced QE2, since then the market has interpreted The Jackson Hole symposium as a conduit to deciphering future monetary action by the fed. This year’s symposium was also supposed to feature the head of the ECB, Mario Draghi, another potential candidate to add liquidity to the market, but he dropped out at the last minute.

This year’s Jackson Hole speech seems to have been somewhat of a disappointment to the market, relative to the high hopes leading up to the event, and specifically hopes of further monetary easing to help stimulate sluggish economic. Unfortunately, for many traders who were expecting further easing measures, little new information was announced. Interestingly though Mr. Bernanke did expound on the potential negative effects of quantitative easing. In my opinion this was the biggest revelation from this year’s speech. The admittance of the potential for declining effectiveness of further “traditional” monetary measures should be a warning to the market that further easing may be harder to come by in the future.

Mr. Bernanke went on to expound the virtues and uses of “non-traditional” monetary measures, in my opinion, signaling a change in the stance of the Fed. However, there were many remarks stating the willingness of the Fed to act if need be. This seemed to be more of a symbolical gesture than likely at this point due to the potential for increasing inflation, multi-year highs in the S&P 500 and relatively high commodity prices, especially in food and energy. Additional monetary easing would likely exacerbate...