Fed Meeting at Jackson Hole Often Brings Market Fireworks; Here's What to Expect

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Thursday, Aug. 22 marks the start of the annual Fed meeting at Jackson Hole, WY - although this one will be much different than those of years past...

Every year since 1981, the U.S. Federal Reserve Bank of Kansas City has invited a slew of economic luminaries to its annual symposium in tony Jackson Hole.

The Jackson Lake Lodge, nestled among two lakes on the Willow Flats that front the imposing Teton Range, can host central bankers from any one of the world's largest economies, as well as cutting-edge economic thinkers and theorists from global academia.

Global market- and bank-watchers look to the Fed meeting at Jackson Hole as a source of critical information regarding potential shifts in macroeconomic policy.

Investors look to the meeting to bring a healthy, if fleeting, shot in the arm to the markets and share prices. Nearly any unexpected remark or errant word coming from the proceedings has the ability to rock the markets.

Money Morning Chief Investment Strategist Keith Fitz-Gerald, despite making the most of this 54-month bull market, has laid much of the credit (or perhaps blame) at Ben Bernanke's feet. Fitz-Gerald believes that the markets have come increasingly unglued from economic reality, and are really just responding to Bernanke's speeches - and, more importantly, his money-printing ways.

Editor's Note: Ben Bernanke's printing presses are still running... for now. But we figure you've only got a few months before he pulls the plug for good, and the market's go on a death spiral. Money Morning's top experts put together a "safety plan" you can use to protect your wealth right away.

A look at how the markets have reacted to Fed meetings at Jackson Hole, plus FOMC statements/Bernanke press conferences, shows just how powerful these pow-wows can be...

Market Love for Jackson Hole Fed Meeting Goes Way Back

This Bernanke-induced rally may have been ongoing for 54 months, but a look back at the post-symposium market bump suggests that the markets just may have begun their infatuation with all things Fed quite a bit earlier than that...

Ben Bernanke, the Fed's chairman and the markets' psychological obsession, has spoken at every Jackson Hole meeting since he took over the chairmanship. In each year, with each speech given, the Dow has experienced triple-digit jumps:

  • 119 points in 2007
  • 197 points in 2008
  • 155 points in 2009
  • 164 points in 2010
  • 134 points in 2011
  • 151 points in 2012

Perhaps unsurprisingly, in each instance but one (in 2009, when he announced the worst of the Great Recession was over), Bernanke spoke about or reiterated the Fed's willingness to intervene in difficult economic circumstances. These words were promptly followed up with a demonstration, most recently with the never-ending rounds of quantitative easing.

Clearly, the markets love this talk, and they have for quite some time.

So, what can we expect at this meeting?

Any Fireworks From The Fed?

Unlike in the past, this Fed meeting at Jackson Hole may prove to be underwhelming - and this at a time when the consensus is that the markets are toppish, and when any continued rally is in question.

Ben Bernanke isn't even coming.

Neither is Mark Carney, the Governor of the Bank of England, nor is European Central Bank President Mario Draghi.

Instead, the heaviest hitters on deck will be Haruhiko Kuroda, Governor of the Bank of Japan, and Alexandre Tombini, Governor of the Central Bank of Brazil.

The last time a Fed chairman didn't make the meeting was in 1988, when Alan Greenspan skipped Jackson Hole. But it was a different world back then.

So should we expect anything to come from the Jackson Hole meetings? Is there any reason at all to follow along?

Unless you can't wait to hear presentations like Northwestern University's Arvind Krishnamurthy on The Transmission of Unconventional Monetary Policy, or Global Liquidity by Princeton University's Jean-Pierre Landau... then perhaps not. This year's Monsters of Macroeconomics tour is set to be a letdown. This year, which is likely to be Ben Bernanke's last as Fed chairman, the bill is noticeably lacking in marquee talent.

The Next Fed Meeting Is Much More Important than Jackson Hole

Setting aside the fact that the world's most powerful central banker simply won't be there, there are some other reasons why this year's Jackson Hole meetings will fail to thrill markets.

One of the reasons behind this great macroeconomic "meh" is a change in the way the Fed releases its data.

In previous years, the Fed was a bit more circumspect in its dissemination of data. There were gaps of months between FOMC meeting minutes, forecasts, and even speeches - all manner of information that might yield some inkling as to how the Fed was going to come down, policy wise. These days, this information is released on a more regular basis, and word from the Fed has become increasingly less rare.

Another reason may have to do with Ben Bernanke's possible successor - or lack thereof. Fed Vice Chair - and potential Bernanke successor - Janet Yellen will be at Jackson Hole, but she is not on the list of keynote speakers. Instead, Yellen will be moderating a panel discussion and not playing any leading role in the proceedings.

Larry Summers, arguably the frontrunner for the job, will not be attending the conference, either. Neither Summers nor Bernanke have given any indication as to why they're skipping the symposium, other than to allude to "scheduling conflicts."

As exciting as Jackson Hole has been for investors over the past three decades, it wouldn't be wise to plan for any triple-digit jumps this year. Anyone looking for a quick bump out of Jackson Hole should look elsewhere.

Specifically, look to the next Fed meeting Sept. 18-19, when Bernanke has another press conference.

As for Jackson Hole, it looks to be a yawner. We'll be sure to wake you when it's over.

This year's Fed meeting at Jackson Hole might be a dud, but you can be sure of excitement at the next Fed meeting. This is going to be huge. Miss it at your own peril. Click here for details.