Courtesy of Doug Short.
September is off to a weak start, and this morning’s pre-market futures have taken a tumble on an even worse September start in Europe. Later this week President Obama will address congress with a jobs plan. Ten days later the Federal Reserve will embark on a two-day FOMC meeting (originally planned for one day) to assess the economy and weigh future options. With this in mind, let’s take another look at the track record of Federal Reserve intervention since the onset of the Great Contraction.
If a picture is worth a thousand words, this chart needs little additional explanation — except perhaps for those who are puzzled by the Jackson Hole callout. The reference is to Chairman Bernanke’s speech at the Fed’s 2010 annual symposium in Jackson Hole, Wyoming. Last year Bernanke strongly hinted about the forthcoming Federal Reserve intervention that was subsequently initiated in November of 2011, namely, the second round of quantitative easing, aka QE2. The recent August Jackson Hole event gave us less concrete expectations. But the minutes of the September FOMC meeting could be next Bernanke shoe to drop.
With current levels of unemployment and a heightening fear of renewed global financial risk, the odds of more Fed intervention are certainly growing.
