Central Banks Push Markets Higher: Dave's Daily

The previous theme over the past 3 years may be repeating as 2012 moves forward: "Bad news is good, good news is better". Of lying and willfully misleading investors is a path we shouldn't go down. The truth is the most thoughtful people involved with markets are being steamrolled by central bank liquidity. Whether it's the ECB, Bank of England, Bank of Japan, People's Bank of China or the U.S. Fed QE and ZIRP trump all other analysis.

If employment or eurozone conditions are weak you must put your mind with "Orwellian" thinking since bad news means more liquidity. Good news means good news and asset prices will inflate even more. The central bank punchbowl isn't going anywhere until perhaps May. Then there'll be more focus on the election and its aftermath. And, after the election the bills will come due, bond vigilantes will become more emboldened and government jobs -- including at the Fed and Treasury -- may be safe enough to make tougher choices.

Until this occurs you just can't use past experience to rationalize current market behavior beyond the printing presses. Even today a thoughtful economist has posited the notion the warm winter has enhanced economic growth.

Separately Greek PSI (Private Sector Investors) results, though premature until official report Saturday (naturally), states 80% or more of these investors are willing to accept 30% on their money in a swap. How is this a good thing actually? After all, investors here could include pension plans, charitable foundations and other entities negatively affecting their beneficiaries.

What does this settlement portend for Portugal, Spain, Italy and beyond? Are they all going to experience these structural defaults? ECB head Draghi states the collateral they're receiving from Greece and other indebted countries in the eurozone is of "high quality". (Puhleeze!) So many PIG countries are just going the way of Argentina and Ecuador in stiffing their creditors and this is believed a good thing.

Jobless Claims Thursday were weaker than expected (362K vs 351K expected and prior revised higher to 354K). Did you know that prior weekly Jobless Claims data has been revised higher 100% of the time over the past two years? How does that happen this consistently?

German Industrial Production improved which surprised markets since just two days prior the PMI was quite weak. Anyway, the last data is what bulls are focused on. The Germans will have a lot of Europe to carry on their backs, much more than just assimilating East Germany as was done two decades previously.

So you think me a bear? Personally I sure am, but we're long overall and that's our job, but I don't have to like it either.

As has been typical for recent melt-up days, volume remains ultra-light and perhaps constrained by those waiting for Friday's employment report. Breadth per the WSJ was positive.

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