The Day Ahead: A Hope-Fired Rally
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Come close to the screen -- real close. I want to share a secret. Although I'm not particularly proud of this, only as recent as three months ago I had zip, zilch, zero idea what a market "melt-up" meant. Now, I certainly pride myself on writing from inspirational external stimuli, and I'm a champion of studying a thesaurus on a rainy weekend day -- but a market melt-up? Really? Ice doesn't melt up the side of a glass. I have never seen lava melt up a volcano, nor has the ocean melted up the front of a glacier. Maybe I missed those NatGeo episodes. Sigh.
- Virtual disappearance of anything negative on the European Union's problems, as if European Central Bank President Mario Draghi has exterminated all that was structurally awry along the coast with a set of comments that went parroted by Mother Merkel.
- Apparently, fiscal cliff is so far off in the distance as to have become irrelevant in a win-or-lose-today market operated by machines. Hey, isn't the market supposed to price in future events months in advance?
- The opinion on current-quarter earnings has solidified: Consensus estimates will prove to be conservative, and perhaps even more so than they were in the second quarter. That would be compliments of melt-up economic data -- my twist to the jargon. This term indicates the spreading of slightly stronger-than-expected headline readings, with complete disregard for any dreary report attributes. In any case, in this land of melt-up economic data, the market has ignored poor new-orders trends in regional Federal Reserve manufacturing surveys, as well as three consecutive months of weakening consumer expectations on the economy, and all of this ahead of the onset of food inflation.