The stock market today opened flat awaiting minutes from the Federal Open Market Committee's (FOMC) June meeting that will be released this afternoon.
Prior to the release of the Fed minutes, Spanish Prime Minister Mariano Rajoy announced that Spain will work immediately towards more government efficiency and austerity. After yesterday's announcement by the Eurozone finance ministers to inject Spanish banks with 30 billion euros ($36.6 billion), Rajoy declared that Spain would cut 65 billion euros or almost $80 billion from its budget in less than three years.
Rajoy said this would be done through cutting public institutions and social welfare programs such as unemployment, plus raising taxes. These decisions come a day after Spain was given an extra year to lower its deficit.
The Federal Reserve will release its minutes around 2 p.m. today and everyone will want to know if QE3 is on its way.
For over a year now investors have pined over the prospect of the Fed lifting the markets, if only for the short-term, through more quantitative easing measures. As experts have proclaimed this action would simply be another "Band-Aid" for a beaten down market.
Money Morning's Chief Investment Strategist Keith Fitz-Gerald put the effects of additional stimulus very simply.
"It has never worked since the dawn of recorded time and it will not work now," said Fitz-Gerald. "You cannot debase your currency and work your way out of this for anything but a short-term basis."
With last week's underwhelming jobs reports and signs from corporate earnings and manufacturing that the economy is slowing further, it might be hard for Chairman Bernanke and the Fed to ignore the option of QE3 any longer.
If Bernanke continues to just hint at more easing that may not be enough to lift this struggling market.
In other domestic news the trade deficit shrank 3.8% to $48.7 billion led by lower crude oil prices, bringing imports down while exports held up well, increasing 0.2%. U.S. wholesale inventories rose 0.3% but these numbers did little to soothe investor's fears ahead of the Fed minutes.