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Stocks are ripping higher today on a few international data points that show economic weakness and not the hard landing that might be associated with a renewed credit crisis.  I guess you could make the argument that this is all rather soothing in that bad is better than horrible.   A bit of a market bounce isn’t unjustified.

The bigger news of the day is the widespread belief that Bernanke is going to whip out a bazooka this Friday.  If you’re a short seller heading into Friday you’re rightfully afraid.  Why would you risk being short into an announcement by a man who is overly in-love with market performance and persistent in building up the Bernanke Put?  The right answer is that you’d have to be borderline insane to be heavily short into the Jackson Hole speech.   Bernanke’s baby is crying and he’s been prone to give it what it wants every time it cries hard enough for it.  And as markets sink in recent weeks there should be little doubt that Bernanke will ride to the rescue, pacifier in hand, ready to insert into the crying mouth of this bloated baby known as Wall Street.

The key here, of course, is knowing whether Bernanke’s pacifier will actually fix the illness or will it just calm the baby down for a brief moment.  We’ll have to wait and see what they actually announce, but my inkling is that there isn’t much the Fed is willing to announce at this juncture that will result in substantive economic improvement.  In my opinion, that means we muddle along with the hopes that the Congress doesn’t cut spending drastically and Europe and China don’t implode.  If last night’s PMI data from China are any sign, it looks like domestic muddle through plus Chinese soft landing could be in the cards.  Unfortunately, the Euro crisis appears to be taking a turn for the worse with no sign of recovery in sight.

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