Building a Wall of Worry

It is axiomatic that sentiment and social mood begins to improve even as objective reality still looks pretty lousy.  Generally what we see is a key conflict between the general misery and a growing "not going to take it any more" attitude that propels us out of our morass in the name of one crusade or another. 

The last big crusade, as President Barack Obama pointed out during the presidential campaign, was led by Ronald Reagan and his merry band of "government is the problemteers" who effectively steered growing resentments and frustrations into political movement that, by some estimates, is only just beginning to give way in earnest.

Back during the campaign, when the candidacy of Obama hinged upon his reaction to statements by "radical cleric" Reverend Wright, I noted that if all Obama had to do was give a great speech on race relations in America in order to regain the initiative and calm the controversy, the smart money was on him being able to pull it off.

This was, after all, what his entire candidacy was about.  In fact, it would have been far more shocking if he hadn't pulled it off.  In the words of the former head of the CIA, for all the fretting, it really was a "slam dunk."

We may be in a similar position right now.  Market sentiment - and arguably global sentiment - is pinned to the passage of a massive spending program in the United States.  Don't let anybody tell you different.  But among the key building blocks for the wall of worry that we will have to scale in order to get from S&P 800 to S&P 1000 or beyond will consist of everything from Hooverite Senate Republicans to an establishment media all-too-ready to be chastened for its rapturous coverage of the recently completed inauguration.

However loud (Holder!  Geitner!), those are voices on the margin at this point, more reactions and reflections than forces capable of controlling the agenda or, as it is likely to turn out, dampening a slowly improving market mood.