Bloomberg News

Wall Street Cut From Guest List for Jackson Hole Fed Meeting

July 22, 2014

Jackson Hole Fed Conference Last Year

Mount Moran is seen through a window at the Jackson Hole economic symposium, sponsored by the Kansas City Federal Reserve Bank at the Jackson Lake Lodge in Moran, Wyoming, on Aug. 23, 2013. This year’s three-day conference in the shadow of the Teton Mountains begins on Aug. 21 with the topic of “Re-evaluating Labor Market Dynamics.” Photographer: Price Chambers/Bloomberg

Wall Street (SPX) doesn’t lead to Jackson Hole this year.

As the Federal Reserve Bank of Kansas City prepares to host next month’s annual gathering of central bankers in Wyoming, seasoned Fed watchers from the financial markets, including the chief U.S. economists of the biggest American banks, aren’t being invited, according to past participants.

Among those who didn’t make the guest list: Vincent Reinhart of Morgan Stanley (MS:US), Jan Hatzius of Goldman Sachs Group Inc. (GS:US), and Bank of America (BAC:US) Corp.’s Ethan Harris. Onetime conference regulars, including Mickey Levy of Blenheim Capital Management LLC and Meredith Whitney of Kenbelle Capital LP, also lose out.

They’ll miss a conference that has foreshadowed some of the Fed’s biggest monetary-policy shifts since the financial crisis, and a keynote speech by Chair Janet Yellen. Perhaps as importantly, they also will be deprived of the opportunity to mingle with policy chiefs over meals and on mountain trails.

“For sell-side people, going to Jackson Hole was huge,” said John Makin, a resident scholar at the American Enterprise Institute in Washington, who as a principal of Caxton Associates LP attended most of the meetings during the past two decades. “If you’re a chief U.S. economist at a big bank, it was great to say you were there.”

This year’s three-day conference in the shadow of the Teton Mountains begins on Aug. 21 with the topic of “Re-evaluating Labor Market Dynamics.”

‘Primary Audience’

“The primary audience for the Jackson Hole economic symposium has always been central bankers,” said Diane Raley, a spokeswoman for the Kansas City Fed, who didn’t comment specifically on this year’s guest list.

“Based on the topic of discussion, the remainder of the available seats varies from year to year as we consider participants who can bring relevant perspectives and insights to the topic discussion,” she said in an e-mail. The audience for this year’s conference “is designed to be a complement” to the focus on labor markets.

The exclusion of Wall Street may reflect a dispute between some regional Fed bank presidents who are more worried by loose monetary policy than Fed governors in Washington including Yellen, said Pippa Malmgren, founder of DRPM Group in London and another frequent delegate who won’t be attending this year.

“I fully support disinviting the chief economists of the largest beneficiaries of quantitative easing,” Malmgren said, referring to the Fed’s program of monthly bond purchases, which is on course to end this year.

Yellen Camp

“This weakens the support for the Yellen camp and gives her opponents more chance to make their case” during the meeting, said Malmgren, a former adviser to U.S. President George W. Bush.

Kansas City Fed President Esther George, the conference host, said in a July 15 speech that various economic indicators suggest the Fed “should already be raising rates” from near zero. Last year she dissented seven times at Federal Open Market Committee meetings, saying added stimulus may spur excessive risk-taking. She doesn’t vote on policy this year.

The finance industry won’t be completely shut out, with former Bank of Israel Governor Jacob Frenkel, now chairman of JPMorgan Chase International, attending for a 29th straight year. Tim Adams, a former U.S. Treasury Department official and now president of the Washington-based Institute of International Finance, also will be there.

Invitation List

Academics with differing views on monetary policy also will ensure the debate stays hot. Stanford University’s John Taylor, Alan Blinder of Princeton University and Glenn Hubbard of Columbia Business School will all be in Wyoming.

Other groups previously cut from the invitation list, which tends to run to about 150 people, include research directors at regional Fed banks. They lost out in 2010 but have since returned.

The meeting has an agenda-setting reputation.

In 2010 and 2012, then-Fed Chairman Ben S. Bernanke signaled new rounds of bond purchases that have pumped up the Fed’s balance sheet to a record $4.4 trillion. Two years ago, Columbia University Professor Michael Woodford’s call for “forward guidance” on the intended path for monetary policy was subsequently heeded by U.S. and European central bankers.

Policy makers don’t always leave Jackson Hole with an altered outlook. In speeches before the 2008 crisis, William White and Claudio Borio of the Bank for International Settlements, as well as current Reserve Bank of India Governor Raghuram Rajan, warned policy makers not to underestimate risks to financial stability.

‘Incredibly Stimulating’

“I found it incredibly stimulating,” said Allen Sinai, president of Decision Economics Inc. in New York, who went for 17 years. “It was a highlight of the year.”

Limiting access for Wall Street and other private-sector economists marks a reversal from the Jackson Hole conferences of past years.

The financial-market community was especially welcome in 2006. Malmgren, Makin and Sinai attended, as did Frenkel and Levy, then of American International Group Inc. and Bank of America respectively. They were joined by representatives from Citigroup Inc. (C:US), Morgan Stanley, Swiss Re Ltd., JPMorgan Chase & Co. (JPM:US), BCA Research Inc., Goldman Sachs, Tudor Investment Corp., Deutsche Bank AG (DBK), Lehman Brothers Holdings Inc., Pacific Investment Management Co., Macroeconomic Advisers LLC, the Lindsey Group LLC and Mesirow Financial Inc.

Fly Fishing

The Kansas City Fed first hosted the economics symposium in 1978 before moving it to Wyoming in 1982 to lure then-Fed Chairman Paul Volcker, an avid fly fisherman, according to “In Late August,” a history of the event published by the organizers.

The real pay-off from journeying to Wyoming may lie beyond the conference room in sharing meals, hiking paths or rafting excursions with central bankers from the U.S. and abroad. Attendees reside at the Jackson Lake Lodge with views of the Tetons and an elevation of more than 6,700 feet (2,042 meters), gathering at the Blue Heron bar or at evening events that have included stargazing and demonstrations of “horse whispering.”

“Generally you have credibility by being there and people are friendly and happy to talk,” said Martin Barnes, chief economist of Montreal-based BCA Research. “It’s very useful in the sense of networking.”

Attending the conference is “a huge ego booster and regarded as a very prestigious thing to be invited to,” he said. “Nobody understands the invitation process -- it’s traditionally opaque.”

To contact the reporter on this story: Simon Kennedy in London at skennedy4@bloomberg.net

To contact the editors responsible for this story: Chris Wellisz at cwellisz@bloomberg.net James L Tyson, Andrew Atkinson


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