The Bernanke put is still there, according to many traders. After a short rally on the good news of a stronger ISM, stocks have drifted lower all day — many citing the decreased odds of QE3 (quantitative easing ).
Again, this kind of speculation creates distortions in markets; that's one of the key problems with QE3. Bad news becomes good news, good news becomes bad news.
A couple of other midday nuggets:
1) the announcement of a Federal Reserve Board action against Goldman Sachs for a "pattern of misconduct and negligence" related to residential mortgage servicing and foreclosure (down 3 percent), and
2) a Reuters story that Greece will overshoot its 2011 budget deficit target by at least one percentage point, and its privatization plan is seriously in doubt.
Next week comes President Obama's speech on the economy, in which it is widely believed that he will float proposals to assist housing and perhaps an infrastructure bank of some sort (but how to fund it?).
There is also key votes on austerity coming up in Italy, and extension of the EFSF and the Greek bailout in a number of European countries in the following weeks.
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