In his semi-annual testimony before the Senate yesterday, Federal Reserve Chairman Ben Bernanke delivered a bleak view of the US economy. The two major near-term risks to America’s financial recovery are the European debt crisis, and the fiscal cliff the US is facing. Bernanke said “We are looking for ways to address the weakness in the economy should more action be needed.” The Fed still has several tools available to it including cutting the Fed Funds rate from 0.25% to zero, buying Treasuries, and even using the discount window to get cheap credit to banks. Bernanke’s term as chairman ends in 2014, making further assurances of low rates ineffective.

This morning Bank of America reported earnings with a beat: 19 cents per share on lower than expected revenue. Notable earnings after today’s close will be from American Express, IBM, Qualcom, and Yum! Brands.

This will be the first quarter that IBM will report earnings with combined results from former Motorola Mobility Holdings Inc. IBM currently derives most of its revenue from outside the US, leading analysts to trim estimates after slowdowns in the BRICS countries. This quarter IBM launched a new initiative dubbed IBM PureSystems, and merges all IBM software and hardware for the user and runs alongside whatever systems were used before. This part of IBM’s recent strategy to move into the growing market for data management and analytics. Analysts are expecting IBM to post a net income of $3.98 billon or $3.42 per share, a 3% gain year over year.

A stock to watch today is Google, which will be reporting earnings after the close on Thursday. The stock routinely moves 5-10% after earnings, making it a popular stock among options traders. As trader’s place their bets on the stock the front month, at-the-money straddle will reveal how much they expect the stock to move. Currently the July 575 straddle trades for $34.80 with an implied volatility of 82%. Following the earnings release, the implied volatility in these options will collapse back to normal levels. Earnings of $10.11 per share on revenue of $8.43 billion are expected.