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It's Party Time for the Markets, Italian Style

NEW YORK (TheStreet) -- It's party time in the markets. If you can hold your head, you can make a lot of money in the next few days.

It's the market's version of a Sylvio Berlusconi party, the kind of event made famous by the former Italian Prime Minister, but without the sex.

Well, Sylvio's back. As The Toronto Star notes, Berlusconi's party took control of Italy's Senate in the weekend's elections and, since the center-left won the House, the country is deadlocked.

For those of you who believe in austerity, this next bit is going to get confusing. While Berlusconi calls himself conservative, he ran this time as an opponent of austerity, which the center-left says should continue. That's right, if you're a western banker in Italy, you're now of the left.

While Italy sorts itself out on the austerity question, back here at home we're about to overdose on it.

The Administration is staging political photo-ops for CBS News to stop the sequester of $85 billion in spending, which could climb to $1.1 trillion, noting that it will hamstring essential services, cause lay-offs and threaten the recovery.

The Fed agrees, writes Politico, and while The Huffington Post says there are some encouraging signs it seems unlikely to happen before March 1, when the cuts start.

As this was written, the markets were walking higher. But they won't stay up. If traders believe the sequester actually will go into effect, you can expect a very sharp selloff. That should be your cue to get out your "buy" list, all those companies you want to pick up dirt-cheap, with your price targets, and buy whatever hits them.

Because the U.S. recovery is very much on track.

Homebuilders are hiring, as the Los Angeles Times reports, while bankers are suffering lay-offs, CNBC reports. Demand for oil is dropping, Bloomberg writes, and we're starting to export energy again.

Costs for renewable energy continue to fall, reports The Oil Drum, and car sales are up, the LA Times adds, meaning the U.S. car fleet is getting more efficient.

Consumer confidence is rising, according to Bloomberg, and companies that serve the broad middle class, from Home Depot (HD), which we've written on, to Macy's are reporting strong results.

With a thumb finally coming down on energy costs, with new technologies like 3-D printing, robotic manufacturing and renewable energy popping out all over, with clouds cutting the cost of computing to the bone, as Information Week writes, the economy looks sound.

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