In a continuation of the Battle Royale, we have in one corner Ben Bernanke, a former professor and his fellow economist elves with their econometric models and grand experiment and in the other we have the MARKET, half of which are foreign investors as we throw into the ring almost $60b of Treasury supply with more Fed purchases this week. With respect to the stock market, the hopes and wishes rally seen over the past month will be met with the reality of earnings season and we’ll see what dreams come true and which get scorched. Earnings will be ugly but commentary about Q2 will be most relevant. In our current environment of consumer deleveraging, Feb Consumer Credit data is out at 3pm and is expected to fall by $3b and would be the 4th month of the previous 5 of declines. Retailers don’t like it but its part of the painful, necessary process of withdrawal. Australia unexpectedly cut rates by 25 bps to 3%.
The Baltic Dry Index fell for a 20th straight day by 1.3% and has now retraced a bit more than 50% of its bounce from the depths of early December but remains 121% above that low.