Today's Economic Data Docket And Full Political Theater Lineup

Fed Chairman Bernanke testimony, second useless Op Twist POMO and August factory orders. And a whole lot of political things happening.

Main economic events on today's docket:

9:00: Federal Reserve Governor Sarah Bloom Raskin speaks on foreclosure.
10:00: Factory orders (August): Unchanged. Goldman forecasts that factory orders were unchanged in August, based on already-reported durable goods orders and our estimate for the nondurable goods component. Any revisions to durable goods shipments as well as data on factory inventories could have implications for the bean-count model for Q3 GDP. Yesterday Goldman raised its estimate for Q3 GDP growth to 2.5% from 2.0% previously.
GS: Flat; Consensus: +0.1%; Last +2.4%.
10:00: Federal Reserve Chairman Ben Bernanke testifies before the joint economic committee (JEC). GS expects two major elements in Bernanke's remarks to the JEC today: 1) a discussion of the Fed's revised growth outlook and in particular the downside risks mentioned in the latest statement, and 2) an explanation of the "twist" and views on how it is intended to help growth. Expect a lively debate on the Fed's latest easing measures and questions about what the Fed could do to support growth in the future.

11:00: Op Twist POMO #2: Fed buys $4.25 - $5.00 billion bonds due 11/15/2019 – 08/15/2021

Meantime in D.C....

Bernanke in Congress, President speaks on jobs bill, House passes a CR and Senate passes currency legislation...

10:00 am -- Fed Chairman Ben Bernanke testifies on the economic outlook.  He is likely to be pressed on “operation twist,” the FOMC’s most recent downbeat economic assessment, the situation in Europe, and will most likely spend a good deal of time responding to questions about the fiscal policy choices facing Congress. In the Joint Economic Committee.

10:00 am -- GAO testifies on auditing the Federal Reserve. In the House Financial Services Subcommittee on Monetary Policy, chaired by Rep. Ron Paul (R-TX).

~2:30 pm – The House is expected to pass continuing resolution (CR) to fund government through Nov. 18.  This is expected to pass without any problem. The Senate passed the measure last week. While they have become routine, CRs are somewhat negative for companies reliant on government contracts because they often keep agencies from starting new initiatives, ordering new equipment etc.

~2:30 pm – The Senate is expected to pass currency legislation. The bill appears unlikely to pass the House in its current form, though House leaders have avoided dismissing that possibility outright.  If pressure mounts to address the issue in that chamber, it seems more likely that they will consider alternative legislation, leaving differences between the chambers unreconciled. The main feature of the bill is to require the Treasury to report on “misalignment” rather than “manipulation” – a lower, more easily triggered standard—and to require the Dept. of Commerce to allow for countervailing duties for US industries that file complaints seeking protection from that misalignment.

3:55 pm -- President Obama speaks in Texas. He will urge Congress to pass his American Jobs Act.  Yesterday House Majority Leader Eric Cantor (R-VA) indicated the House was unlikely to take up the bill as a whole, which had appeared to be at least a possibility shortly after the President announced his plan (though passage had never seemed likely). That said, the House may ultimately face a vote on some of its components—particularly the payroll tax cut extension—if they are included in the super committee’s legislation.   The Senate still plans to take up the bill in its entirety in the next few weeks.