Thoughts

The Fed chairman cools expectations, and JPMorgan's Dimon raises some questions.

The bearded one made four major points:

1. The soft patch currently being experienced is mostly a byproduct of an increase in the price of oil, weather and the Japanese nuclear accident and tsunami.

2. Second-half 2011 economic growth will likely rebound to a moderate rate of increase.

3. Commodity price inflation will likely abate.

4. The Fed will maintain its policy of accommodation.

While the above provideed no surprise, the Fed chairman was clearly more negative in his assessment of the economy (citing the fiscal drag and a loss of momentum in job growth). With more market participants now seeing a self-sustaining soft patch rather than a self-sustaining recovery, it should not be surprising that a slightly negative immediate market response occurred.

JPMorgan's Jamie Dimon, in a long soliloquy, essentially voiced concerns that the intervention by the government during and after the crisis had a good outcome but might be now derailing confidence by interfering with the recovery.

Dimon's question will get a lot of press overnight.



April consumer credit growth came in better than expected, rising by $6.25 billion.



For the traders, the market has been so bad and acts so poorly that it can probably be traded on the long side.



Run, don't walk, to read Andrew Ross Sorkin's analysis in the New York Times of the fine print of GS' testimony.



Meredith Whitney doubled down on her negative municipal call/warning that the worst is yet to come in that market.