“Memories, like the corners of my mind. Misty water colored memories, of the Way We Were,” sang Barbra Streisand and I’ll be humming the song as Bernanke gives a speech today titled “Reflections on a Year of Crisis” at 10am from Jackson Hole. Unfortunately the trip down memory lane won’t begin in mid ’03 when Bernanke stood with Greenspan in cutting rates to 1% and didn’t change policy until mid ’04. We thus won’t get a full picture from Bernanke of what has unfolded. It’s ironic that the man who helped to spark the fire is now looking for accolades because he has temporarily put it out. I’m fully aware of the dire straits we faced in Oct/Nov but I just want full disclosure of the record. Oh well, sorry to whine about this, again. While most of Asia was lower, China bounced for the 3rd day in 4 even though there was talk of an upcoming hike in reserve requirements. Existing Home Sales, 85% of the housing market, are expected to total 5mm in July and would be the highest level since Sept ’08.
The Euro region manufacturing and services composite index rose to 50 from 47 and was 2 points higher than expected. It has reached the breakeven level of expansion and contraction for the first time since May ’08. The services component mostly led the way as it rose 3 points to 49.5 while manufacturing rose just .4 points to 47.9. I can’t explain why the headline index reached 50 while the two individual components did not other than to say that maybe it’s a separate measure of sentiment. In particular, manufacturing in France rose above 50 as did services in Germany. In response, the Euro is rising to a two week high vs the US$ and European stocks are up across the board. This bounce in turn is helping the S&P’s ahead of August expiration. However, the 10 yr bond yield at a 5 1/2 week low continues to send a different message on the US economy than stocks are.