HOW MUCH WILL BE TOO MUCH?

during the latest, longest and most powerful bear market rally, the economic data has been lackluster and news that nothing has changed in how wall street does business has continued. the question i have posed is how much will be too much? how much more bad economic data can the market endure before it realizes that not much has changed with the economy. and how much more distain for investors will wall street need to show before the last individual investor goes on-line for its brokerage needs. the tipping point is unclear.

what will be the straw that breaks the bulls back? i'm not sure. the market has become numb to bad news and so anxious for the bear market to end that it just doesnt care what the reality is. surely a terror attack in the US would wreck havok on the markets but thats an ongoing possibility that has been all but ignored by the equity markets even when the terror alert is raised to orange or high. the dollar has its issues but can and will be manipulated by our federal reserve as well as the BOJ and the european union in coordinated efforts to maintain "stability". employment data is always something that worries economists but any further weakness in the labor market will be dismissed as a lagging indicator and will not make the optimists nervous. capital spending by businesses remains weak and excess capacity is expected to keep a lid on that for sometime to come so that wont be a shocker. consumers are being "reflated" with record low interest rates making their homes cash machines and supporting their spending habits so they shouldn't be a big focus. wall street corruption has been swept under the rug again and further scandal will be good reading but not market moving.

over the last few weeks, scandal at the NY Times, investigation into IBM accounting, the SEC criminal probe into Freddie Mac's CEO, government inquiry into how Boeing won business from competitors, and the list continues to grow. isnt this enough to show that the "new and improved" wall street morality and investor focus is a bunch of bogus nonsense?

so what will correct the latest rally and keep the market in check? maybe it will be the same thing that corrected the bear market in march. that would be a war. not sure who the target will be but the list has grown since our most recent victory. i'm certainly not predicting another military confrontation, but its not out of the realm of possibility. and if the tax package doesnt work like the president wants, he may have to resort to his ability to overthrow regimes to get himself re-elected. not sure that would help the economy but it would be a big distraction and we could have another war rally.

have a grateful day!
larry