The S&P 500 closed Friday night at 1745 – an all-time high – as the relief rally after the resolution of the US shutdown and debt debate continued.
At all-time highs, questions are always raised about sustainability, but part of the strength at the moment is clearly a don’t fight the Fed (and the Fed’s $80 billion of money flowing into the stock market each month) kind of meme.
So as the US Government wakes up again and as 3 weeks of data not released starts to flow, today’s chart shows that the taper is likely to be pushed way back into 2014, and in doing so, supports stocks further.
The chart above shows that having printed better than expectations for a couple of months, data around the G10, BRICs and Emerging Markets is cycling lower once again.
In any normal market, that would be bad news for stocks, but as perverse as it can be that weaker economic data is good for stocks, the reality is that the Fed’s taper hurt stocks.
So as it recedes in 2014, the huge monthly injection of cash into the economy trade comes back in focus.
Good news for the stocks bulls and good news for the ASX.
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