Breaking Wall Street Market News & Reports

In an all effort to stave off deflation, and get the economy moving again, Federal Reserve Chairman Ben Bernanke may be getting ready to take his money-creating helicopter to a new altitude. Bernanke earned the moniker “Helicopter Ben” after the then-Fed governor referenced Milton Friedman’s famed “helicopter drop” favorably in a 2002 speech outlining how the Fed could defeat deflation. (Friedman had argued hypothetically that a central bank could drop currency from a helicopter to stimulate spending.) here. Nearly eight years on from that speech, Alan Greenspan’s successor is due Friday at 10 a.m. Eastern to deliver another vital keynote at the Kansas City Fed’s annual symposium in Jackson Hole, Wyo., with the straightforward title, “The Economic Outlook and the Federal Reserve’s Policy Response”

Bernanke’s comments on the economic outlook will be scrutinized closely, particularly since the Fed downgraded its view earlier in the month. He will once again be able to sway markets in either direction, but will he provide confidence just as had done in March of 2009 or continue this downward slippery slope of a huge sell-off? Friday’s markets will also get a look at the revisions made to second quarter GDP at 8:30 a.m. That could put the growth rate for the quarter ended June 30 at just 1.3 percent, compared to the previously reported 2.4 percent. That would also be the starting point for the current quarter, which by all signs is showing a continuing drop off in activity.

Friday is going to bring a meaningful downward revision to GDP. Bernanke needs to infuse confidence back into the markets. He needs to outline clearly and decisively what the Fed Reserve is willing to do, to back stop further losses. If we revert back to 1000 in the S&P we’re in for some trouble. The Fed President had indicated that he will charge negative interest (a.k.a fee to reserves) to Reserve’s that banks hold with the Fed, so they are forced to lend. I think that alone will not entice ordinary people to take out loans. Society is up to their throats with debt. We’re in a debt deleveraging cycle. Society prefers to revert back to savings. Look at the savings rate. We have not reached a 6% of savings rate since the late 50′s and 20′s. We are reverting back to the Great Depression ideology. SAVE, SAVE, SAVE. We are no longer a consumer based economy like we once were. I feel that Bernanke will infuse confidence but I think the revised Q2 GDP figure will be countertutitive. We’re set to open up as future’s indicate a positive 30 point gain.