\n\tBy Greg Peel<\/p>\n
\n\tBen Bernanke wrote a letter. How quaint. The contents of the letter were revealed on Friday night and helped the Dow to rally 100 points or 0.8%, the S&P to gain 0.7% to 1411, and the Nasdaq<\/span> to add 0.5%.<\/p>\n \n\tBernanke wrote the letter in response to a question from the House Oversight Chairman as to whether it's premature to take further monetary policy action at this time. In his response the Fed chairman suggested the impact of the now year-old Operation Twist was still working its way through the economy, but that policy must be set with regard to future performance. The rest of the letter was a rehash of what Bernanke said in his August monetary policy statement.<\/p>\n \n\tIn other words, there's still nothing new here. Qualification that the Fed is looking ahead and attempting to be preemptive rather than just reactive is comforting, but also standard stuff for a central bank. As we approach the Jackson Hole symposium, beginning on Thursday night, market reaction to any little snippet of “news” has become almost farcical. Up one day, down the next, all in an information vacuum. This week is effectively the last week of the US summer break, which traditionally ends with the Labor Day long weekend. Suntanned traders and fund managers will be back just in time for the kick-off of the Central Bank Spectacular.<\/p>\n \n\tWe may see a welcome end to all the tiresome Fed speculation, whichever way Bernanke decides to go, as early as Thursday night. We might see QE3<\/span>, or not, or some middling level of specific policy action, being touted. However Bernanke may also need to wait and see what Draghi<\/span> has to say. He is scheduled to speak at the symposium on the Friday. The ECB<\/span> meeting is on September 6. The problem is, Draghi<\/span> has indicated he can't do much until he knows what the German court ruling on the ESM<\/span> will be, and that decision is not due till September 12. The official Fed meeting is on September 13.<\/p>\n \n\tSo it's quite possible we'll still be none the wiser on global central bank action all the way though to mid-September. Oh the agony.<\/p>\n \n\tOver in Europe on Friday night, attention focused on a report that suggested what I have noted above, that the ECB<\/span> will not make any decision on bond purchases at the September 6 meeting due to the impending court ruling. The meeting between the German and Greek leaders, in which Greece asked for two year's extension, concluded without any indication of Merkel's thoughts on the matter. The ECB<\/span> report sent the euro lower on the session, pushing the US dollar index up 0.3% to 81.63.<\/p>\n \n\tThe big ticket US economic data point on Friday night was July new durable goods orders. They shot up 4.2% – the biggest increase since December – when economists had forecast 3.0%. However the result contained a big chunk of lumpy aircraft orders, as well as significant auto orders. If we take those out to leave a more indicative reading on general goods, the result was a 0.4% fall, and the fourth decline in five months. Take out defense spending, and your left with core capital goods. They fell 3.4% following a 2.7% decline in June.<\/p>\n \n\tFuel for Fed thought. But the other release of the night was July new homes sales and they jumped 3.6% to match the two-year high reading set in May. Suggestions are that this quarter may just see the first positive contribution to GDP from the US housing market since the GFC<\/span>. That's no trivial matter. Housing's contribution to China's economy, for example, is 12% of GDP.<\/p>\n \n\tBase metals were a little stronger in London on the US data and despite the weaker dollar. Gold was steady nevertheless at US$1670.50\/oz and the Aussie has slipped 0.3% to US$1.0407.<\/p>\n \n\tThe US dollar's rise did send oil, which has been running to the upside of late, lower, with Brent down US$1.42 to US$113.59\/bbl<\/span> and West Texas down US12c<\/span> to US$96.15\/bbl<\/span> despite the build up of Tropical Storm Issac<\/span> in the Caribbean. But over the weekend the storm has developed into Hurricane Isaac and is now lashing the Florida coast, causing the Republican convention and thus Mitt Romney's formal nomination to be postponed. Some models have Isaac swinging in towards New Orleans and oil companies, including BHP<\/span>, have begun shutting down Gulf rigs and evacuating workers.<\/p>\n \n\tObama has spoken of potential releases from the US Strategic Petroleum Reserve if post-summer gasoline prices do not retreat, citing geopolitical tensions with Iran as the excuse. The Republicans have labelled<\/span> any such release an election ploy. Obama may soon have a better excuse, however.<\/p>\n \n\tThe SPI<\/span> Overnight rose 25 points or 0.6%.<\/p>\n \n\tFriday marks the end of August and thus the last week of the local results season. This week will not be quite as frantic as last week, but busy nevertheless. The week will be topped and tailed by retail with Billabong<\/span> ((BBG<\/span>)) reporting today and Harvey Norman ((HVN<\/span>)) on Friday, while WorleyParsons<\/span> ((WOR<\/span>)), Transfield<\/span> ((TSE<\/span>)), Perpetual ((PPT<\/span>)), Lend Lease ((LLC)) and Paladin Energy ((PDN<\/span>)) provide highlights in between among what are otherwise mostly lesser cap stocks in the spotlight this week.<\/p>\n \n\tOn the local economic front, the countdown to next week's June quarter GDP result is now on in earnest with quarterly construction work done due on Wednesday and private sector capex<\/span> on Thursday, the latter being of particular interest to the RBA<\/span>. We'll also see monthly new home sales on Tuesday, building approvals on Thursday and private sector credit on Friday.<\/p>\n \n\tThe US will see the first revision of its June quarter GDP estimate on Wednesday and economists are expecting a lift to 1.7% from the initial 1.5%. Monthly pending home sales are out tonight, the Case-Shiller<\/span> house price index, Richmond Fed index, and consumer confidence on Tuesday, personal income and spending and chain store sales on Thursday and factory orders on Friday. On Wednesday the Fed will release its Beige Book anecdotal assessment of activity in each Fed region, and on Thursday, as we know, all cameras and microphones will be trained on Wyoming.<\/p>\n \n\tUK markets are closed tonight for a holiday, so no base metals.<\/p>\n \n\tRudi will appear on Sky Business on Thursday at noon.<\/p>\n