For the first three days of this week, the stock market coasted serenely past earnings surprises, merger announcements, and economic reports. We were secure in the knowledge that “Uncle Ben” Bernanke would once again preserve our economy, as he has done since the Global Financial Crisis in 2007.
Yesterday, the realization began to sink in that even Uncle Ben has only a finite list of options, and the market began to sink . . . down 170 points on the Dow.
Today, at 10AM, it is finally showtime! Bernanke will take the stage in Jackson Hole, Wyoming, in what used to be a wonkish, rustic retreat of people who actually found monetary policy interesting. It has now become the stage for monetary policy.
Faithful readers know I suspect there is already a stealth QE3, being carried out by foreign central banks for each other, instead of the Fed taking all of the political heat. My hope for today is that he will open his trench coat and show lots of options that he still has. While it is unlikely he will announce implementation of anything new today, my prayer is that he discusses the firewall between the U.S. and European banking systems..
Adding to the drama is that the GDP estimate for the second quarter will be revised before Bernanke’s speech. A big surprise, up or down, could easily move the futures market, which is predicting a flat open right now.
Maybe next week, we can pay attention to earnings surprises, merger announcements, and economic reports again, I hope??