

Fresh off of the mediocre GDP report, the markets are getting drunk. These sub-par data outputs mean the Fed simply cannot fathom a Taper yet.

GDP just grew at an anemic 1.7%. The PCE indicator fell to lows of 0.8%, and now we’re just waiting on unemployment. Even if the rate moves lower marginally, labor-force participation is making record lows too.

How did the markets fare because of this? At record highs, the Dow finished up almost 130 points with the S&P up more than 21 points. We’ll see if this 1700 level holds for the S&P, but as it stands, $12 trillion has been added to the US stock market since 2009. Place that number alongside gains that the US economy has realized – only $1.3 trillion.

I wouldn’t exactly call this equilibrium.

Who Cares, Right?

I don’t wanna speak too soon, but we might be in for a quietly bullish month. Perhaps I got caught in the trap of thinking that Fed actions would shake-up the summer doldrums and give the markets solid trend reversal developments.

But the VIX dropped again today, hovering right above the 13.00 level. August and September futures for the volatility index were also down as price continues to trade within a tight (low) range.



Here’s my thinking at the moment: until September, when real taper fears could resurface, the Fed will probably stay out of the news. They’re still behind the scenes making those little asset purchases. But the economy market will remain up-trending.

For the time being, the Fed’s hands are tied. And until data outputs improve, we’ll likely see more of the same…

Get ready for more reports of markets making all-time highs and shattering through key levels of resistance. The cops aren’t coming yet, so this party doesn’t have to stop.