More Suspicions About Those Bernanke Phone Calls

"Were Goldman, Hyperion, Bridgewater and others privy to what is essentially inside information?" asks Kevin Duffy, founder of Bearing Asset Management.

Duffy takes a close look at the period leading up to the September rate cuts in light of recent revelations that Ben Bernanke spoke to some key market players in the weeks after the August FOMC meeting. And he wonders whether the people who spoke to the Fed chief might have been tipped off by their conversations about what the Fed was planning.

He quotes a friend unnamed friend who seems convinced that those who had access to Bernanke has an advantage. "Bernanke might defend himself by arguing that he only asked the questions and didn't answer any. Give me a break! Great traders like Ranieri made their fortunes reading the nuances of comments made by other traders AND policymakers. Tone and emphasis matter as does the types of questions being asked. It is a HUGE advantage having this kind of special access," Duffy's friend writes.

We'll only add that Bernanke famously apologized after he told CNBC anchor Maria Bartiromo that the markets were misreading earlier remarks of his as indicating the Fed would not increase interest rates. asked

"In the future, my communications with the public and with the markets will be entirely through regular and formal channels," Bernanke told the Senate banking committee when questioned about the Bartiromo enounter.

Apparently undisclosed conversations with Bob Rubin, Lewis Ranieri and Raymond Dalio count as a "regular and formal" channel. Now you know.

Duffy's Bearing Asset Management invented what they call the Credit Bubble Index which aggregates banks, brokers, credit card and credit insurance companies, government-sponsored entities, homebuilders, non-bank financial companies, and subprime lenders.

Were Friends of the Fed Tipped Off? [LewRockwell.com]