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2011/09/01: QuickPost: Not Just Europe & DC: Staredown at Data Gulch

September 1, 2011 1 comment

The cowboy showdown intense stare prior to the shooting might be a bit of a stretch. Yet, it does seem that the economic data becoming more balanced has allowed the equities to rally in spite of overall weak cyclical global economic background. There is the fudge of the last few days of Greek banks merging creating a more stable environment, and the fact the US has contained its own fiscal dilemma by punting the major decisions over to the Congressional Super Committee. What an image that is… Will they be wearing capes?

However, as we noted in our Brief Update yesterday, it feels like we are back to fed-centric “bad news is good news” environment. Consistently downbeat economic indications from the Fed since Mr. Bernanke’s speech at Jackson Hole last Friday has encouraged visions of liquidity expansion sugarplums to dance in the heads of the equity bulls. Might Bernanke Claus show up with some further liquidity expansion goodies sooner than previously anticipated? For all of the speculation on that, we frankly doubt it.

It runs against the current political environment, and even what is now the obvious significant dissension within the FOMC based upon Tuesday’s meeting minutes release. As such, even though the anticipation that worse than expected economic conditions might foment more immediate further support from the Fed, that leaves quite a bit more of the near-term influence back on the economic data.

And it seems to be at somewhat of a standoff. No surprise therefore that the equities are churning sideways since reaching somewhat more significant resistance yesterday morning. It is also of note that the govvies remained focused on the weaker overall background, and have not backed off very much from their equally important higher resistance areas.

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