MacroScope

Bernanke complicates Wall Street’s view of Romney

October 24, 2012

Chatter about whether Ben Bernanke will stay as the Federal Reserve’s chief has complicated Wall Street’s view on a possible Mitt Romney administration. Speculation about Bernanke’s future heightened after the New York Times reported on Tuesday Bernanke told close friends he probably will not seek another term even if U.S. President Barack Obama wins a second term.

While Wall Street generally supports Romney, the Republican candidate has stated publicly he will not reappoint Bernanke for a third term as the Fed Chairman. Bernanke’s current tenure expires in January 2014.

“He did say he was going to neuter the Fed,” Robbert Van Batenburg, head of global research at Louis Capital said.

Several bond analysts and traders said a Bernanke departure with a possible replacement whose view on monetary policy and Fed’s role is opposite of Bernanke’s would inject uncertainty into financial markets, not only domestic ones but also those abroad. Sean Incremona at 4Cast tweeted on Wednesday: “…a vote for Obama = a vote for Bernanke???”

As Rick Newman of U.S. News and World Report points out, investors have plenty of reasons to like the Chairman, who has consistently come to the market’s rescue as the economic recovery sputtered.

The end of the Bernanke era at the Fed might be something Wall Street has to swallow under a Romney presidency unless the candidate changes his mind. Based on his about-face on a number of issues in recent days, this could happen although it might raise the ire of the anti-Fed faction within his party.

Left-leaning political pundits have said Romney has thrown the neo-cons and social conservatives “under the bus” in recent days in a bid to win undecided voters in battleground states. So Ron Paul, you have been warned.

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