Stock Market Getting the Clues It Needs

Wow, an excellent day for the US stock markets today. Earnings continued to come out generally positively, there were a few blips in earnings but revenues did well across the board which means that there is demand out there, a good sign indeed. Also, the release of the minutes from the last Fed meeting showed that Bernanke & Co. see an end to rate hikes. Of course this could change because forthcoming data will continue to inform the governors' thinking. So today we got 2 of 3 Big Clues that the market was looking for. Since January the market has been seeking the answer to three questions in my opinion:
1) Will the economy/earnings growth slow (wot with rising rates and energy costs and all)?
2) Will the Fed overdo it and plunge us into a monetary-induced recession?
3) Will investors get a continuation of the current tax policy regarding dividends and cap gains?

Well, it looks like 1 & 2 are coming into focus and the answers are edifying. We will have to wait for the answer to #3, the political calculus is a toss up to slightly pessimistic given the way that the Republican Senate majority goes all milquetoasty when the Dems turn up the heat regarding the deficit. If the members come back from their Easter breaks having heard a mouthful about the importance of these tax cuts, then maybe we will get some traction on the extensions of those tax rates. Clearing up the uncertainty of investment capital tax policy will be that third leg that bolsters more solid advances in stocks.