One of my top five favorite movies ever is "Cool Hand Luke," and one of the best lines is "sometimes nothing is a real cool hand." This may be the final interpretation of Ben Bernanke today. Initially, the Street seems disappointed, and perhaps agitated, by comments about what the Street could do rather than actually doing something. While it was acknowledged "central bankers alone cannot solve the world's economic problems," he was forceful about doing whatever it takes to keep the economy from capsizing. I guess that line about solving alone was a shot at the White House, and for sure when talking about businesses being uncertain because of all the regulation etc. was a dig at the fiscal side of the equation.
Bernanke says "household spending depends on the job situation and the pace at which households repair their balances." I'm with him on the latter point, but household spending isn't being held back as much from the job situation than the leadership void. I've made the point that households have tons of cash and their debt is back to first quarter 2007 rates. The Federal Reserve Chairman also echoed the theme from this morning's commentary…lending standards have to become less rigid. If the rebound holds, the ball goes back to the White House's court, which recalls another great line from "Cool Hand Luke"…"some men you just can't reach."
Maybe the Street needed tough love? One thing is for sure, this is an odd session visa vie news flow.
Hit Me with Your Best Shot…Fire Away
The Street took a few blows on the chin. It didn't get what it wanted from Ben Bernanke, Intel (NASDAQ:INTC) issued an earnings warning, and Michigan consumer sentiment came in below consensus.
Ironically, the Intel news might be good for tech as it underscores the need for the company to make more acquisitions in order to be a player in the mobile space.
After 22 straight months of higher serious delinquencies, the number is down four consecutive months to 4.99%.
The market is taking all the news in stride, but the fact is we need a shift in policy from the White House, and we need it now. I don't think it will come, however. In the meantime, UK GDP of 1.2% was a higher revision, and the best quarter of growth since 2001. The UK is taking on austerity measures our politicians are too chicken to tackle. Construction spending in the UK surged 8.5% for 2Q GDP. I say jolly good show England, but there is a cautionary element to this news, too. The celebration of mediocrity can get to the point when we are one day donning the pom-poms for 1.2% GDP growth.