Daily Digits for February 24, 2014

I’m looking for the all-time high of the S&P500 to be challenged this week.  The reasons are funny.  Last week wasn’t particularly strong.  In fact, economic data is pretty well mixed.  Earnings are mixed.  Growth is mixed.  Excuses are mixed.  But we have a Fed that’s keeping its foot on the gas, and there’s no end in sight.  The jobless numbers are becoming less and less relevant to policymakers.  Now we’re at the point we’re literally excusing economic data due to the weather.  I think the crux may be more simple:  without an inflation problem, the Fed has no reason to do anything jarring to their policies.    If we’re going to keep doing what we’ve been doing, why would we expect it to change?  Super low interest rates mean lower costs for margin — and the leverage in the system can be pumped back up on the cheap.  Isn’t this the pre-real-estate-crash phenomenon re-invented?  If we can borrow and next-to-nothing, and leverage up the markets to do it, all the growth in derivative products would make sense.  Just follow the credit bubble, right?…

This is a light news week.  There’s just not that much to move the bar on the economic calendar.  The media may invent some things to keep our eyes glued to their advertisers.  But really we just don’t have a ton to watch — new home sales on Wednesday, Jobless claims on Thursday, and GDP on Friday…  Well, GDP is backward looking.  Homes and jobs get a pass because of the weather.  Now what?  Well, anything could happen I suppose.  We have a President and Supreme Court that are more than willing to step in and try to do Congress’s job.  That’s the outside shot though.  If we repeat the recent patters, it’s going to be volatility coming out of the system while we inch higher…  thus my expectation that we’ll challenge the all-time highs this week.

Daily Digits

Daily Digits for 2-24-14

Weekly Estimated Range

Weekly Estimated Range for 2-24-14

 

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