I’m not sure if an agreement in Washington over the payroll tax cut is the reason why the market is looking higher again but to put it in perspective, it’s the 5th short term tax cut/rebate check agreement since 2001. Bush had his in ’01 and ’08 followed by Obama in ’09 and this year and next. As with any short term policy, whether fiscal or monetary, the economy is left back at square 1 when it wears off. Show me one employer that has or will hire someone new because of these 5 rebates. I’m all for getting our hard earned money back from the clutches of DC but we need long term economic thinking and unfortunately it’s a lesson never learned, even following the aftermath of the past 10+ yrs of short term monetary and fiscal largesse. In Europe, Italian consumer confidence in Dec fell to the lowest on record dating back to this survey’s start date in 1996. While little changed today, the Italian 10 yr yield is just 8 bps below 7% as the market has shown little confidence that the fiscal steps taken by the Monti gov’t will have a meaningful impact. In Asia, the Shanghai index rallied for the 1st time this week.
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