A very positive and constructive week chalked full of positive 'upside' earnings surprises in a variety of mixed industries on both sides of the border. Inflation is becoming more of a 'talking point' and dominant theme. The State of the Union address had a definite self congratulatory and delusional tone. Goals of increasing manufacturing, education, and innovation targets were set without the corresponding strategy to attain them. Debt levels have almost become a 'shoulder shrug' after thought. I suppose all that is to be expected considering Obama had his first 'uptick' in popularity in quite a while. A major 'downtick' to be considered is the weak and sputtering long end of the US treasury market. Yields have headed into fresh recent new high territory with continued potential pressure in the offing. As single mindedly bullish as the S&P/DJIA/TSX has been for weeks - I cannot see further 'acceleration' in a significantly deteriorating bond market environment. Wall Street is out and about trying to generate interest in spankin' brand new 50 and 100 year maturity treasury offerings. The feedback should prove very interesting indeed. Copper, sugar, and selected grains have hit life of the contract new high territory. Crude Oil continues to be contained in the $88-$92 range. Next week the quarterly earning barrage continues. It is fair to assume in many cases the surprises will continue to be on the 'upside!'
Bottom Line : Both of the 'bullet proof' Teflon TSX & DJIA averages look to inscrutably continue it's upward march toward 2007 levels. A cautious eye should be fixed on the debt markets and interest rate movements. Expect a few air pockets and turbulence along the way to the 'increasing-the-national-debt-threshold' south of the border discussion! I can't wait!
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