Home > Uncategorized > Brief Update: 2010/01/15: Equity Markets’ Ability to Ignore Weak Economic Data Reaches a Critical Phase Today

Brief Update: 2010/01/15: Equity Markets’ Ability to Ignore Weak Economic Data Reaches a Critical Phase Today

And that likely has implications for other asset classes(especially bonds.) Whatever one may think about equities as an indication of future economic growth, they have absorbed an incredible amount of weak economic data lately on the back of better corporate profit expectations.

▪ A while back we noted that especially American culture tends not to evolve smoothly between phases, and is subject to the latest ‘mania’ as the driver of the mass psychology. As noted, in the context of the global imbalances which prevailed previous, it would be a bad sign for the real global economy if the next American mania turned out to be “Frugality.” Well, it’s here. Aside from the anecdotal evidence from those who used to brag about bling now cooing about savings at Costco, the continued significant reductions in US Consumer Credit fit right in with other recent weak economic data like yesterday’s much weaker than expected December US Retail Sales and the broader view from the Merrill Lynch Affluent Survey. And that is just the latest bit of weak data leading into this morning’s… 

▪ That is especially important for the March NASDAQ 100 future that has now tested its critical 1,890-93 resistance. And while the US Dollar Index has been pressured below recent trading lows, it is only back into its important recent .7700 UP Break with .7650 Tolerance (congestion, MAs and trend indicators) in spite of the equities strength. Our further inference from that is that the battered old buck may be in a win-win position regardless of the equities decision,…

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