Last week we once again saw most major indices reach all time highs and yet there is not that much love in the market. Economic numbers are getting better and the economy seems to be on the right tract. Every time there seems to be a pullback in the wind, winds blow in another direction and the market chugs along to another record. Earnings continue to be strong and interest rates will remain low for the foreseeable future. All underpinnings of a robust bull market, which we are in the middle of.

While unemployment remains stubbornly over 6%, we think that the more important number is wage growth and that is beginning to pick up steam. Wage growth is important because the competition for employees is starting to become a major component of the economic picture. That competition is proof of an expanding job market. We will see unemployment drop a lot faster in the next 6 months than we have in the last 6 years.

There has been a lot of talk about the momentum stocks that have been getting crushed over the last few days. Remember momentum not only lifts stocks it also knocks the stuffing out of them when the upward momentum ends. This is different from a bubble bursting because the momentum stocks here are all legitimate companies with powerful brands. Bubble bursting stock tops usually have great stocks getting hit along with a vast majority of stocks that went along for the ride. That’s not the case this time. Its just the reality of the situation that companies should not trade at 60 -70 times P/E.

This week doesn’t have much in the way of important data points but we will have Fed Governors talking all over the country and the Fed minutes will be out Wednesday. We suspect there will be a lot of chatter about it as economists will try to read between the lines but there really won’t be any need for that. The Fed is staying the course and they are watching data very closely and will be ready to act quickly if needed. See, you don’t even need to wait around; we gave it to you before hand.