S&P Declines 6; Dow Falls 50

The path of least resistance... down... simple as that ahead of the Bernanke speech and with more brokerages downgrading one another. Tech was supportive on the notion that technology companies are less debt encumbered and thus a safe bet in this market. That's all well and good unless the economy goes down the crapper and tech orders go with them - but for now tech is seen as the safe haven. I guess pigs do fly. Still, for a 6 point down day in the S&P, VIX jumped over 5% as fear remains.

Bernanke To Make the Markets Less Cranky?

The text of Gentle Ben's speech will be released at 10 a.m. New York time and I wouldn't put it past the Fed chief to say something that could amount to a bull raid on the market. Recall, on March 21, stocks staged a rally after the Fed switched its bias. In April Bernanke told the markets the Fed was monitoring subprime woes and a few days later Freddie and Fannie injected billions into the system, helping the market take off. Just a few weeks ago, Bernanke snuck in the discount rate cut before the market open on an expiration Friday and again the stock market went through the roof.

Perhaps I'm giving Bernanke too much of the benefit of the doubt, but the guy has built up a bit of a track record by saying and doing things that have incited some bullish responses.

But the issue remains - how does a rate cut of a quarter or a half get people to resume participating in risky speculations that had once upon a time given a boost to the system? A 2 point cut in the overnight bank lending rate, as AutoNation's CEO Mike Jackson has been begging for would certainly reignite things. But that's the fantasy of a CEO-easy-money-crackhead who needs more cheap-money-crack so his customers can buy more cars than they need. Bernanke wants to be the anti-Grennspan by many accounts and seems to want to get away from the model of lowering fed funds at the blink of an eye.

Push, Push in the Bush

To make things more intriguing, there are reports that our President is going to introduce some token measures to get folks through the rough mortgage times: Bush Plans Steps to Help Troubled Borrowers. The administration never ceases to amuse with the thought that it can "jawbone" banks to hold off on foreclosures. That's not the way things work nowadays. Decisions on foreclosure are largely automated and rest with the investors of mortgage backed securities. They call the shots and tell mortgage servicers what to do. You can bet the MBS people are going to continue to give the thumbs down on loans that go past 90 days past due and release the lions.

Will a Bernanke-Bush one-two lift the markets ahead of a long weekend, or will it be too little, too late? Stay tuned.