EmailThe focus is 100% on Bernanke's speech at 10:00 ET this morning. It is anybody's guess how the market reacts. S&P futures suggest an up open of about nine points. We'll put that down as a reaction to yesterday's sell-off.
The Japanese stock exchange fell 1.6% as the economic outlook there is darkening quickly. July industrial production fell 1.2% in a major surpise, as a 1.5% or larger gain was expected. The Shanghai exchange fell 0.3%.
European exchanges, however, are up about 1%. That is correlated with hopes that central bankers rev up the printing presses. The Spanish stock exchange is up 2% even though the yield on the Spanish 10-year note is up to 6.70% from 6.59% yesterday. It is within shouting distance of the much-feared 7% level.
The Chicago PMI report is due at 9:45 ET, a consumer confidence index at 9:55 ET, and July factory orders data at 10:00 ET. These reports will attract a quick glance and then all eyes will be back on the wires waiting for the Bernanke headlines.
The consensus seems to be that Bernanke will not announce another round of quantitative easing, at least based on surveys of economists. But action the past month suggests that the market has priced in at least some possibility of a direct announcement today. Disappointment is definitely possible.
It is also true, however, that the market has reacted positively to vague statements such as "the Fed stands ready to act if necessary" with expectations that the next round of easing remains just around the corner. That could certainly happen again today.
Remember that the market often moves sharply on Fed policy announcements, only to reverse within minutes. It could be a highly volatile day.
Founder and Chairman, Briefing.com
