Monday was one of the lowest volume days of the year, and while no one watches the Volatility Index (VIX) in the kind of environment where stocks are at historic highs, it is worth noting the market's fear gauge is hovering close to the multi-year lows we saw earlier in 2013.
Why? Much of it can be attributed to Federal Reserve chairman Ben Bernanke's offensive to convince the markets that no rate hikes are imminent. The Fed may be considering tapering, but they are not raising rates. Traders have translated this to mean less need for insurance.
This is a positive for markets, as long as Mr. Bernanke hews to his message tomorrow that Fed policy is "data dependent", flexible, adaptable, and refrains from rocking the boat.
Good luck with that. Mr. Bernanke obviously believes that interest rates have moved too far, too fast — and he wants to stop that immediately. He also seems to want to avoid any asset bubbles.
As for tapering, the recent data is really a problem. True, payrolls have been slowly improving. Still, the economic data have been choppy at best. How is the Fed going to reduce tapering when U.S. retail sales and business inventories have been so crummy, and we are facing a sub-one percent second quarter growth?
Still, other central bankers are taking a page from Mr. Bernanke's playbook. Traders were passing around a comment from ECB board member Joerg Asmussen, insisting that interest rates will stay long for a very long time: "We will operate an expansive monetary policy for as long as is necessary" Mr. Asmussen told a local German chamber of commerce.
1) On earnings, make it four in a row for the financials: Goldman Sachs reported earnings well above expectations, following on strong reports from JP Morgan, Wells Fargo, and Citigroup. Investment and Lending was especially strong, with net revenue of $1.42 billion vs. 891 million expected; bonds accounted for nearly half ($658 million) of the gains.
Perhaps more relevant, Comerica (CMA), one of the nation's biggest regional banks (California, Texas, Arizona, Florida) also saw its bottom ling strengthen in the latest quarter: 76 cents per share vs estimates of 70 cents. Credit improvement continued, and as with all banks there were lower loan loss provisions. Loan growth, however, remains modest, up roughly 3 percent. Meanwhile, strength in commercial and also in construction loans offset by a decline in commercial mortgage loans. They lowered guidance for loan growth, expecting growth to be lower than 2012. Deposit growth was modest, with average balances up only 1 percent.
Coca-Cola was a clear disappointment,with earnings of 63 cents per share that were in line with expectations, but revenues of $12.75 billion were below consensus. Elsewhere, volumes (the key metric) was well below normal, up 1 percent vs. consensus of up about 3 percent. European sales accounted for much of the weakness, which were down 4 percent; while Latin America was up 2 percent, North America down 1 percent. Pacific was up 2 percent, all below consensus.
2) European car sales at 17-year lows in Europe? Ouch!
—By CNBC's Bob Pisani