Global Macro Monitor

So Bernanke says 2016 is when he thinks unemployment moves to the monetary policy target of 6.5 percent.   That’s a long time before the party in U.S. stocks will end.    Nutcracker short squeeze.

The shakeout over the past week and the huge bounce seems to have left just as many on the wrong side of the equity market now as before the mini correction.   Our sense is this will only increase the dearth of sellers in the next few months.

Sequester?   The stock investors who got flushed by the last Washington circus paid dearly.

Italy?  The MIB stock index was up almost 2 percent today.   Needs to be monitored but the market seems to have just as much faith in Draghi as they do Bernanke.  The government was able sell €6.5 billion of medium and long-term bonds albeit at higher interest rates.

How long does the rally last?   Wish we knew for certain, but the all-time closing highs for the Dow and S&P500 are in clear sight.   Like any good hockey players who try to skate where the puck is going to be rather than where it’s been,  it not likely, in our opinion, the market will retreat without taking a clear shot at new highs.

Furthermore, the economic data are positive and confirming,  the demand/supply for equities seem to be positive, and, most important,  the Fed is your friend for a long time and, unlike last year,  Mr. Bernanke is putting real money to work every month with the purchase of $45 billion in Treasury securities and $40 billion in mortgage backs.  That’s $85 billion every month,  folks.

Remember, we have a trading and shorter term perspective and can change our views relatively quickly depending on market indicators.   If the market fails to follow through here,  we will change our view.    You also know we think the global markets are the Truman Show and someday Jim Cary will realize he lives in a fake world.  Until then we’ll trade ’em as we see ’em.

It feels like the panic buying stampede is going to continue — until it doesn’t.

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