Can the business media finally get a good bead on Ben Bernanke? In terms of anticipating broad stock market moves, understanding what makes the Fed chairman tick (or tock) is essential; it's perhaps the single-most important factor (outside of God, family and a good set of crossed fingers) in the lives of market timers.So tell me ... Is this guy a reasoned genius? Or a colossal boob? With Bernanke nearly six months into his tenure, and after a week in which he testified before Congress at a fraught economic interval, it is about time someone ushered some reason into the discourse ( I thought you'd never ask). After all, as usual with the business media, (mis)perceptions have been swinging wildly between the two extremes. In the beginning, as Bernanke was walking onto stage, we kept hearing what a great guy he was. The Business Press Maven derided the worshipful coverage back in
When he made the now infamous off-the-cuff remarks to a CNBC correspondent at a Washington dinner, saying that the markets didn't understand him, you'd have thought he admitted to kidnapping the Lindbergh baby. "February marked the ascendancy of plain-spoken Ben S. Bernanke as the new chief," wrote The Baltimore Sun. "But mutual fund investors might be pining for the old days and just assume Bernanke had kept his mouth shut." Then, this week, Bernanke opened his mouth again and the markets rejoiced. In an article called "New Ben-efits," The New York Post went the fairly typical route by quoting an analyst saying, "Bernanke boosted his credibility through the most transparent and sophisticated presentation of monetary policy I have seen since I began in the 1960s." He's perfect and his parents are nice! No, wait ... the blabbermouth needs to keep his mouth shut! Wait, again ... since the time the earth cooled, he is the greatest! Will the real Slim Bernanke please stand up? Truth is, this polished academic -- dealt a tough hand by the sainted Alan Greenspan who, seeking his own victory lap of coverage, did not raise rates as he should have toward the end of his terms -- has been the same bright, though not magical, inexperienced man all along. You cannot understand the strengths and missteps of Bernanke without understanding his academic background. And I don't mean that journo-bio crud about his mom and dad and kindergarten. This is a man who, fairly recently, was almost appointed provost of Princeton University. That means he came this close to living out his days mediating shin-kicking fights between department chairs hoping for first-floor offices with windows instead of the basement ones without. In other words, the big stage is something relatively new to him.
Especially at heady Washington events, expect growing pains like the sweet somethings whispered into Maria Bartiromo's ear. And remember that what was lost in all the criticism of where he spoke and his resulting apology was what he said. He was not, as markets wished, going to stop lowering rates. Rates were going to be determined by future data. The academic had run so far from his ivory-tower theory of inflation targets that he had hit smack into the best three words in monetary management: Uh, we'll see. That's why you can't get fooled, like so many journalists, into giving Bernanke undue credit for speaking in a coherent way. Remember, despite his droning and jargon, Greenspan was very clear about what he was going to do. A recent New Yorker story was right to give him credit for opening up the Fed. Stylistically, he seemed closed. Effectively, he was open. Bernanke, ironically, has a more open style than Greenspan. Anyone who watched him this week could actually listen without having a narcoleptic attack. But in practice, he is not quite as open. That's partly because there is not as much to be open about. "Uh, we'll see" is now his guiding force. And at a time fraught with so many variables, that's the best course. The one remaining issue -- and The Wall Street Journal gets the coveted Business Press Maven "Nod of Approval" award for highlighting it in an editorial -- is whether Bernanke is going to bring on a world of hurt with his assumption, stated this week, that slowing economic growth will limit inflation. Ben, I generally wound my way around to writing nice stuff about you here, but, dude, have you ever heard of stagflation? Before I go off to a weekend of attic-cleaning, let me hand out the dreaded Business Press Maven "Back of the Hand" award. As you know, Yahoo! ( YHOO) came out with some bad news this week that made its stock price wad up in a little ball and get thrown in the garbage. Second-quarter sales were below expectations, they guided future numbers down and, of course, their new search tool is delayed. So sample two headlines and, remember: The Business Media Confuses. You Break Your Back Trying to Decide: "Yahoo revenue outlook disappoints, upgrade delayed." "Yahoo 2Q profit meets analysts' estimates." Time for me to clean the attic.