Stocks are Down With Yesterday's Speeches Changing Nothing

S&P 500 Index futures are currently down 0.5 percent ahead of the open. With all the highest ranking politicians' and central bankers' speeches done this week we can now settle the score as we head towards weekend.

QE3 is not very likely at the September FOMC meeting
Fed Chairman Ben Bernanke did not mention QE3 in his speech yesterday and only said that the Fed was ready to use additional monetary tools to help the economy if necessary. We expect the Fed to keep the powder dry, thus disappointing the market again at the September FOMC meeting, and wait for stronger indications that the economy is sinking pushing the unemployment rate up. The Fed know that additional QE programmes will have increasingly lower marginal impact on the economy so it absolutely imperative that QE3 is only iniated if the economy is falling into a recession again. However, please remind that the 10 year yields are already below 2 percent, the U.S. money supply is already growing at 8.2 percent YoY and the inflation is coming down, so all the important factors are already supporting the Fed's goal of stimulating the economy as much as possible through monetary tools.

Obama is trying something he cannot impact anyway
Whereas Ben Bernanke did not give the market anything, Barack Obama's job speech gave more than anticipated with a job plan worth USD 447 billion, which he first of all will not get through Congress, and secondly if a smaller programme gets through it will not materially change the job situation in the short timespan that he has to the next election in 2012. On a net basis this is insignificant for investors and the economy.

Later today the only economic data coming out is U.S. wholesale inventories for July is expected (14:00 GMT) to come out at 0.7 percent up from 0.6 percent in June. This indicates that companies are still forecasting decent demand from consumers as the re-stocking of inventory is still running at a very high pace compared to previous levels since september 2001.

Europe down on concerns over the Economy; Porsche down on postponement of Volkswagen merger
Euro STOXX 50 Index is down 0.7 percent snapping back from previous lows but still reflecting growing concerns over the global economy and the situation in Europe's credit markets; both Spanish and Italian 10 year yields are coming back above 5 percent.

Porsche is down 9.8 percent in today's session as pending lawsuits in the U.S. are dragging out the expected deadline for the merger with Volkswagen which was expected to be within year-end but now investors are looking at 2012.