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Slow and Steady

May 11, 2012 – 5:08 pm

We have some inflation numbers out this morning which is giving the FED the green light to do whatever they want to do to boost the economy without worrying about causing an uptick in prices. With their twofold mandate to boost economic activity and yet keep inflation under control it is often difficult to do both at the same time.

The weeks ahead are going to be full of angst over Europe. This week with radical elements being elected in France and Greece, markets around the world convulsed worrying about the two countries’ continued focus on reducing their debt. Surprisingly, the U.S. stock market seemed to be the place where calm trumped fear, though our market didn’t escape weakness. That calm was helped along by economic numbers reported this week showing continued slow growth with slight improvement in construction spending. We might even see construction adding to our GDP in 2012 for the first time in years.

Not all is clear sailing and certainly it should be expected that Europe will cause more problems, but there is nothing in any of the numbers that tells us that the U.S. will fall back into recession, unlike many parts of Europe. Also, if there were, the FED would be warming up their next QE program. It looks like China and other parts of Asia already have their QE out of the bullpen and on the playing field.

Good Trading
Steve Peasley

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