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CNBC's Domm: Today's Agenda in the Markets

Stocks prices are soft ahead of the opening after a tumultuous night in Asia which ultimately left markets there higher. Investors are also watching comments from Fed Chairman Ben Bernanke on housing and the economy made to a South African monetary conference this morning.

CNBC chief economics correspondent Steve Liesman says a key takeaway from Bernanke's message is: "Housing is bad and could get worse. Subprime problems are bad and could get worse, but spillover to the economy is limited."

Traders will also be watching non-manufacturing ISM, released at 10 am New York time.

China in Focus

China's Shanghai market went on a roller-coaster ride overnight, initially dragging down other Asian stock markets as it took a more than 7% dip. Ultimately, Shanghai ended up more than 2% and the rest of Asian stocks finished with gains. European markets are weaker.

Yesterday, Wall Street staged a turnaround late in the day, as investors ignored the Chinese market's turmoil and rates eased in the bond market. Oil rose a hefty $1.13 to $66.21 a barrel as a cyclone headed toward the Arabian peninsula. The rise in energy took the wind out of airline stocks, but pushed up energy related shares. Oil is slightly weaker this morning after the cyclone reached the coast of Oman, closing in the main gas terminal. The storm is the worst to hit Oman in 30 years.

The Dow notched up just an eight-point gain but it was enough to give the index its 49th record close since October. Nasdaq was up four points, at 2618, a fresh 6-1/4 year high, and the S&P 500 scored its fourth record close in a row, closing 2.84 points higher at 1539.

Wading in Money

When we ask stock traders why the market is moving higher when there's no apparent catalyst, a lot of times they talk about the push of liquidity as a torrent of cash rolls into the market.

"The reason the stock market does not go down is because of the tidal wave of money out there," says CNBC's Bob Pisani, from his booth at the NYSE.

Pisani says the amount of money every day in announced corporate repurchase plans and in cash mergers is a measure of that liquidity.

"Trim Tabs is pushing $7.2 billion -- that's the number they are using for the daily cash takeovers and announced buybacks, which is far and away a record for the second quarter. $4.8 billion was a record in the first quarter. We're 50% above the record in the first quarter," says Pisani.

"There's a lot of money on the sidelines. There's no complacency out there. That's helping prop up the market as well. The big debate is whether or not we're going to see a summer swoon. We've had one the last three years," he said. The big wave of liquidity is one reason why some traders don't see one.

Merger Mania

The merger wave continues with the expected announcement that Avaya will be bought for $8.2 billion by TPG Capital and Silver Lake Partners.

In the ongoing saga for control of Dow Jones, talks between News Corp's Rupert Murdoch and the controlling Bancroft family ended late yesterday with Murdoch calling the discussions on his bid "constructive."

Taking a Bath

The stock of retailer Bed Bath and Beyond is under water this morning after the company issued its first profit warning ever. Goldman cut the stock to "neutral." Women's apparel retailer Cache also warned second quarter earnings would miss its forecast because of a decline in May sales. We'll be watching for more such comments as retailers report May sales on Thursday.

Kobe Bryant renewed his deal with Nike, reports our Darren Rovell, in a scoop last night. See his blog for more.

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FOXA
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