Notes From Underground: Bernanke to Draghi, “Extended Period Language Is So Passé. Try, ‘Overstates The Health'”

Today at the NBER meeting Chairman Bernanke lit up the board with this phrase “OVERSTATES THE HEALTH.This was in direct reference to the 7.6% unemployment rate. If you go to the C-SPAN website and watch the presentation of the speech and Q&A, someone asks a question about the FED‘s response to its dual mandate at the 32:30 mark of the video. Bernanke answered by discussing that the 7.6% rate does not reflect the issue with the PARTICIPATION RATE and the PROBLEM WITH UNDER-EMPLOYMENT, thus it OVERSTATES THE HEALTH of employment.

It is at this juncture–check a two-minute bar chart of the EURO, GOLD, SPOOS and anything else and you will see that a bid comes to the market. The Fed Chairman took a very aggressive dovish tone (oxymoron) as he explained to the market that even the 6.5% threshold will not be a line in the sand–statistical levels without a solid foundation will be “mere dust in the wind.” The market went into today’s Bernanke speech with a LONG DOLLAR, LONG EQUITY, SHORT TREASURY position. Upon further review ….

Now it will be up to Mario Draghi to respond to the FED and the soft language of “extended period” will have to be replaced with something stronger than “overstates  the health.” The ECB seemed to be rather content with its efforts of July 4 as the EURO weakened and immediate crisis seemed to calm. It certainly seems from Draghi’s rhetoric that he was trying to put downward pressure on the EURO with FED-type language. If Bernanke keeps pushing the envelope of “LOOSE TONGUES,” the ECB may have to reply with real liquidity. GAME ON.

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7 Responses to “Notes From Underground: Bernanke to Draghi, “Extended Period Language Is So Passé. Try, ‘Overstates The Health'””

  1. Tres Knippa Says:


    I was on BNN yesterday and I talked EXACTLY about the labor participation rate.

    Here is the link:

    Stop by the desk sometime and lets catch up.


  2. Mario Says:

    Everyone collect the best read from the NOTES FROM THE UNDERGROUND and share the thoughts about why you choose that particular NOTE. contact me at and lets put it together…..Only gives us macro followers an upper hand.

  3. yra harris Says:

    Mario–I will help push this in the next few blogs–thanks very much for your efforts

  4. Mario Says:

    Thanks Yra….Great memories here about a year plus ago. Seeing what has actually come to be and what still Inevitably will take place. Incoporates a little about the Gold flux we have seen and the good ole boy Draghi and what has actually changed.

  5. traderstorch Says:

    Nice read. Thank you for it.

    Trader’s Torch

  6. GreenAB Says:

    if Bernanke and Draghi are trying to manage their currencies they´re looking in the wrong direction.

    right before their eyes Japan is stealing exports from everyone.

    without pre 2007 massive credit expansion i see the world economy pretty much as a zero sum game.
    when one large economy booms, another one has to suffer.

    imo the recent weakness in US/German/Chinese man. PMIs is no conincidence while Japan is strengtening.

  7. yra harris Says:

    Green AB—that has been a theme I have discussed for many months–the Japanese taking market share in industries they compete with Germany especially–japanese auto stocks versus Germans since Nov.when the Yen began to weaken

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