The last 10 days have been the lowest volume period (as measured by SPY volume) since the top in Apr 2011, and before that, the Christmas period in 2010. Clearly, markets are waiting to hear what Mr. Bernanke has to say.
Markets overnight have a positive bent, led by Asia, again a rare occurrence. Risk assets rallied around the Hong Kong open, and haven’t moved much since. Hang Seng the leader overnight, up 1.5%, Europe and SPX futures up a little less than 0.5%. The dollar is close to flat after being lower in the Asian session, and commodities are slightly higher.
Yesterday’s retail sales number added further evidence of growth in distress, though markets are hopeful that the White Knight, in the form of central banks, comes to the rescue. I still think far too much faith is being placed on their rescue abilities. I will say it once again – in the 2007-2008 period, central banks were not able to stop market declines. I trust history more than the commentators.
Bernanke begins his testimony at 10am. He will almost surely talk about potential for further easing, but as long as he does not explicitly delineate further easing to come, I expect markets to be disappointed. We will see how shiny the market sees the White Knight’s armor today.