Traders Look To Bernanke, Bush For Clues
Stocks are winding up for a higher open as traders focus on the Fed Chairman Ben Bernanke's Jackson Hole address and President Bush's expected subprime rescue plan for defaulting homeowners.
Bernanke's 10 am speech has been the buzz of global markets for more than a week and it is being watched carefully for any clues on how the Fed might react to the credit crises and whether the Fed chairman will give a nod to the current condition in markets. Bernanke's speech is expected to focus on housing, housing finance and monetary policy, timely but maybe not telling in terms of whether the Fed is leaning towards a rate cut.
President Bush is due to speak at 11:10 am ET and is expected to propose a rescue plan for homeowners deep in arrears on subprime mortgages. Remember, Treasury Secretary Hank Paulson told CNBC recently that President Bush had asked for options to help homeowners facing foreclosure. This is a non financial plan relying on the FHA.
Wall Street usually shuns government bailouts but in this case markets are reacting positively. Asian stocks, for instance, rose sharply and anticipation of the Bush speech was cited as a big part of the reason. The Japanese Nikkei was up more than 2.5%. The rest of Asia's markets closed higher and European markets were
The pressure is on Bernanke though "the president's taken a little bit of the sunshine off of that," said Joe Iuorio of TJM Institutional Services on "Squawk Box."
Sell in September?
What's left to sell? Data compiled by CNBC's Ariel Nelson shows September has on average been the worst performing month for the Dow. August, you'll be happy to note, has traditionally been one of the best and surprisingly, the Dow could finish this rocky month with a gain. As of yesterday's close, the Dow was up 0.2%.
Since 1896, the data shows the Dow has been negative for the month of September 59.1% of the time, with an average decline of 1.2%. August, on the other hand, has been positive 63.6% of the time and the average return was 1.2%.
The Dow is 5.4% away from the closing high of 14,000 it hit on July 18. The Dow was down a relatively puny 50 points yesterday. the Nasdaq was up 2, and the S&P was down 6 at 1457. The Dow lost 1.5% in July and 1.6% in June.
Paying the Price
The corporate debt market is showing signs of life but also showing that issuers must pay more. The Financial Times took a look at a General Electric debt issue, one of the first significant bond issues in European markets since July. The FT says GE was forced to pay an extra $9.8 million more a year for a 1.9 billion euro issue.
Driving it Home
Toyota said it plans to sell a whopping 10.4 million vehicles globally in 2009. If it succeeds, it would surpass a record set by General Motors 30 years ago. "It's a staggering projection and shows that the growth is not in the United States," says CNBC's Phil Lebeau.
Dell shares are moving higher after the company reported a 46% increase in profits of $733 million after the bell. Dell beat Wall Street estimates with profit growth helped by strong sales of server and storage systems and lower prices for components.
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