Jan 29. Bernanke confirmed
Bernanke was approved for a new term. Q4 GDP today expected +4.6% on inventory swing. India rasied reserve requirements more than expected as Asia continues to lead in the withdrawal of stimulus.
–Stocks have no bounce, and continue to probe lower levels. However, it’s not providing much of a boost to treasuries, and vol is being capped by the relentless strangle seller, (now the TYH 115/119 strangle, sold 10k at 15).
–Though probably lagging in nature, state finances are likely to be an economic headwind, especially when coupled with Obama’s freeze on discretionary spending (if that should ever occur). For example, Mayor Bloomberg submitted a new budget but said the economy is not improving enough to avoid layoffs and other cuts (Reuters). Prior to primary elections a business group is starting a website called IllinoisBroke to publicize the dire fiscal position of the state of Illinois. Chicago cancelled its main 4th of July fireworks display. While stocks were rebounding, there was a feeling of stabilization which now seems to be deflating. The news of “less bad” which caused a collective sigh of relief is giving way to a hardscrabble environment where programs like cash for clunkers and the housing tax credit (scheduled to end in March) fade away. Add in possible monetary restraint as banks are bashed and the picture darkens.
–Chicago PMI out today, expected 57 from 60.
