Budget cut of $38B. Everyone can declare victory, until mid-May when the debt ceiling needs to be lifted. London was hit by the lefties when they cut back. Same will happen here when Congress finally cuts something meaningful. Media will go psychotic. Maybe it will happen this year for the 2012 budget. Full-court blitz to turn public opinion to the left, riots. If Tea Party pols can survive it with base intact for the 2012 elections the country has a chance. Present value of federal unfunded obligations is currently about $112Trillion and are the lead weight over all future annual budgets. As an historical aside, prior to 1917 Congress had to legislate each debt issue. The Second Liberty Bond Act granted that authority to Treasury as long as it kept below the limit. Yet another Wilson constitutional expedient abused by our government.
6 or 7 trading days remain until next I1 peak. The stock market has been in a wave (iv) sideways pattern since 4/1. Wave (i) lasted 3 days and wave (iii) lasted 8 days, so let's give wave (v) a tentative length of 5 days, whenever it starts.
S&P 500 Earnings in prior years Earnings P/E
2010 Actual GAAP Earnings $76.97 16.3
2009 Actual GAAP Earnings $50.97 21.9
2008 Actual GAAP Earnings $14.88 60.7
2007 Actual GAAP Earnings $66.18 22.2
2006 Actual GAAP Earnings $81.51 17.4
2005 Actual GAAP Earnings $69.93 17.8
2004 Actual GAAP Earnings $58.55 20.7
2003 Actual GAAP Earnings $48.74 22.8
So expect the evil speculator finger-pointing from U.S. pols for oil and food, but we know that if you throw bucketfuls of minnows into a pool of sharks that they will ramp up into a feeding frenzy. Picture Ben with the buckets, etc.
Long bonds and dollar are positions I am avoiding, both facing declines in sentiment gauges starting soon. Follow this link for a relevant post.