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In what may be Bernanke's last hurrah, tough questions loom

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Federal Reserve Chairman Ben Bernanke, in prepared testimony for the House, indicated bond tapering could begin this year, but added that nothing was on a pre-determined course.

Here's what's most interesting: that the House Financial Services Committee asked for, and received, early access to his text, which was released at 8:30 am Eastern — a full hour and a half before it has historically been released.

Why? I don't know, but traders seem to think that the committee wanted time to formulate more pointed questions for Bernanke.

This makes some sense, but it also raises the stakes. It could indicate more hostile questioning.


This is also likely to be Mr. Bernanke's final testimony in front of the House, so he may also be a little more blunt in criticizing the lack of action on fiscal reform, which he has so often called for.

Just as an aside, among those who have been at war with the Fed, it is now a requirement to state that "tapering IS tightening." The reasoning is that the Fed can only control short-term interest rates by varying the Fed Funds rate. QE was a way of lowering long-term rates (the Fed sold sold short-term bonds and bought long-term bonds, thus lowering long-term rates), so removing tapering is a form of tightening.

Elsewhere:

1) Decent loan growth at U.S. Bancorp and PNC Bank helped boost their bottom line. Regional banks dropped yesterday as Comerica, the first regional bank to report, reported weaker than expected loan growth. There was concern this could be a pattern.

That doesn't appear to be happening yet. USB and PNC both reported decent loan growth, with the former reporting in-line earnings per share. There There was year-over-year loan growth of roughly 5 percent, and modest sequential growth in Commercial & Industrial, commercial real estate, and mortgages. The results are not stellar, but at least consistent with their guidance.

For its part, PNC did even better. Year over year loan growth was roughly 7 percent, strongly outperforming its peers. By comparison, the industry as a whole has seen loan growth grow by roughly 3 percent.

In short, both PNC and USB are growing loans faster than their competitors.

This is significant, since banks have had notably outperformed in the past few months on the belief that: 1) interest rates are rising, and 2) that there will be modest growth in loans as the economy improves.

So far we have had a modest pickup in rates, yet not much loan growth. That makes the news from PNC and USB is welcome.

Bank of America, which has become the fifth large bank to beat earnings, reported modest loan growth of about 1.1 percent, though commercial loans were strong.

And if the rest of the industry doesn't get any loan growth? Well, look at Comerica.

2) Don't panic on housing yet. June housing starts, at 836,000, was 100,000 below estimates. Huh? Just looking at the headline, you might think that this will add fuel to the fire that rising rates are hurting demand.

But look more carefully: most of the miss was multifamily/apartment dwellings, which plunged 27 percent. This is considered a very volatile sector.

What matters is single family —and here permits rose to the highest level since May 2008. Elsewhere, the NAHB sentiment numbers were strong yesterday, the highest readings in over seven years.

3) another sign housing sales are strong: Realogy, the largest real estate company in the country, pre-released earnings ex-items of $1.03-$1.09, well above consensus of 67 cents. Equally important, Apollo Global will dispose of essentially all of its 25.1 million shares in a secondary offering. RLGY went public in October 2012 at $27 and is now trading over $50.

By CNBC's Bob Pisani

  • A CNBC reporter since 1990, Bob Pisani covers Wall Street from the floor of the New York Stock Exchange.

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