At the time of my last post, May 19, the S&P was at 1190, about where it closed last night. As I write we've popped back up to 1197, not to far from 1211 where we started the year. So overall the sideways action continues, making life hard for traders and investors alike. The goldilocks environment of 3% growth, low interest rates and low inflation provides support while the things we worry about-- trade deficit, budget deficit, high oil prices, flattening yield curve, declining leading indicators, real estate bubbles, etc. hamper the upside. The day to day statistics, earnings and news moves things up a little or down for a few days, but we always seem to revert to the mean. Eventually I believe the things we worry about will tip the scales lower beacuse some of them are unsustainable. The timing however is and has been quite uncertain. The resillency of the U.S. economy is amazing.
Next week looks to be moreof the same, slightly weaker economic stats, but nothing earth shattering it appears. However you never know what will tip the scales. Be wary of weak economic stats because one could break the camels back. The push up today got its impetus from Treasury Secretary Snow"s testimony putting more heat on the China to revalue. While this is certainly not good for mainstreet, having to pay higher prices for imported goods, it will have an immediate positive effect on corpoate profits. Good especially for those multinationals with a high percentage of their revenues coming form asia. In other currency matters, it will be interesting to see how much of an effect the French vote has on the euro, if they vote no on the EU constitution.
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