A weak Q2 GDP figure which was 'better than expected' along with a pledge by Ben Bernanke to do 'what he can' to create prosperity for us all, was enough to embolden traders who have been berated with a slew of bad economic news.  An earning morning selloff was bought aggressively and U.S. markets jumped to finish at highs of the day; the S&P 500 gained 1.7% and NASDAQ 1.6%.   For the week the S&P 500 fell 0.7% and NASDAQ 1.2%.

There is little to touch on in the speech from Bernanke as it was mostly rehash with more hints of another campaign of Quantitative Easing to come in the future.  The Fed Chief insists the economy is still poised for growth; indeed the Fed model calls for 4% GDP in 2011... please don't laugh.

• Bernanke said in a speech at the Fed's annual conference that while the economic recovery remains tentative, the central bank remains ready to take extra steps to stimulate the economy if necessary, such as buying more debt securities in order to keep interest rates low. He said he still expects the economy to grow next year.

Speaking of GDP growth, despite trillions spent by the Federal Reserve and federal government, all the United States has to show for it was 2 quarters over 3% GDP.  The 2nd quarter of 2010 was revised down Friday from 2.4% to 1.6% which bookends a similar quarter in July-Sep 2009.  So to "buy" some extra points of GDP for a few quarters, it only cost the citizens a few trillion.  Now, despite the easiest money policies in history and the back third of the federal stimulus still coursing through the system GDP has faltered below 2% once more.  This is especially pathetic considering that the deeper the recession, the larger the (organic) rebound should be i.e. a -6% drop in GDP should be offset by a few +7-8% GDP quarters.  The domestic economy did not even come close to reaching these levels this time around, despite the "not so invisible" hands helping out.

• The Commerce Department reported that gross domestic product grew at a 1.6% rate in the April-to-June period. That's still way down from its earlier estimate of 2.4% but not as bad as the 1.4% expected by economists.
• "These are terrible numbers," Kim Caughey, equity research analyst at Fort Pitt Capital Group in Pittsburgh, said. "But they weren't frighteningly horrible."
• The performance is "very disappointing," said Ethan Harris, an economist at Bank of America-Merrill Lynch. "Usually you get a bigger bounceback."

Ten year treasuries finally spiked down, sending yields jumping from 2.48% to 2.65% - just as equity markets were oversold, treasury markets were overbought; hence a reversion to mean was to be expected.  Commodities were mostly higher with crude oil gaining 2.5% to $75.17, copper 1.7% to $3.36, and silver up 0.3% to $19.04.  Gold gained 20 cents.

European shares rallied as U.S. markets reversed mid morning, with Britain and France gaining 0.9% and Germany 0.7%.

• Britain's economy grew by 1.2 percent during the second quarter, faster than the earlier estimate of 1.1 percent, thanks to a sharp rise in construction  The update from the Office for National Statistics confirmed that the British economy grew for a third straight quarter, following six quarters of negative growth during a deep recession.  Output in the construction industry grew by 8.5 percent during the quarter, higher than the 6.6 percent reported in the first estimate on July 23.

Asian stocks were mixed with gains in Japan (+0.9%) and China (+0.3%) offset by losses in India (-1.3%).  Japan economic data released Friday was mixed:

• The unemployment rate in July improved for the first time since January, but families made less money. Deflation persisted as consumer prices fell for the 17th straight month.
• The nation's seasonally adjusted unemployment rate improved to 5.2% from 5.3% in June. The result marked the first decline since January.  The country's core consumer price index, which excludes fresh food, fell 1.1% from a year earlier.

Brazilian stocks rose by the most in 3 months, jumping 2.7% to pare losses for the week to 1.6%.