Not ones to break our arms patting ourselves on the back we do need to take a bow. Markets are acting exactly as we said and while the chorus is getting louder for a correction, we aren’t singing that tune just yet.

Last week’s employment report bore out what we have been saying. The economy has fairly good momentum and will continue to get stronger as the weeks and months go by.

A lot of analysts are calling for fairly small earnings growth in the first quarter and that, in theory should put the brakes on this building bull market. We are not in that camp. We believe that most companies have positioned themselves to be in lock step with an expanding economy. They have cash on hand to build, train, expand or buy businesses and we fully expect to see every aspect of an increasingly vigorous recovery take hold.

Yes, there will be pauses and there will be corrections, mostly minor, in the coming nine months but we will see every index reach its inflation adjusted high and continue upward from there.

The coming week is very light on data and the market, just by its nature in an extended bull market, will begin to get a little sloppy. Retail sales probably will continue to be sluggish but we don’t think they will disappoint so it will be a non-event.

In the past, the PPI and the CPI would be huge data points that economists and the Fed watched closely. We do think there will be a slight rise in both but again, that is a short-term concern. As we have said before, the strongest influence on inflation is rising wages and we still are not anywhere close to that yet. When we get there, it actually should be welcomed, as it is a sure sign of a very strong economy.