Market Leading the Recovery or Out of Sync?

President Obama continues to say we are in a recovery, albeit weak. One set of economic indicators that is rushing ahead are stock indexes. As the DOW bangs against 14000 ceiling, a new recovery high (March 2009 was the low), and the S&P 500 reaches its all-time high, money appears to be moving into the markets, betting the bull will keep running.

Do investors see a long-term recovery, including in the rapidly developing markets of China, India and Brazil, and overcoming the still lagging growth in Europe and America? Do they believe business investments, earnings and profits can overcome the fiscally dysfunctional governments that dominate many nations? Specifically in America, do they believe that gridlock may stop the aggressive tax increases, redistribution and regulatory agenda? Finally, is the Federal Reserve’s policy of massive stimulus sustainable and will the inevitable adjustments be timely and not disruptive? A lot of factors can affect this bull market.