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Good morning. Ho hum, stocks advanced again yesterday. The S&P rose 0.51% and the DJIA tacked on another 72 points to the current joyride to the upside. Assuming the bulls can keep on keepin' on at the current pace, the S&P should reach a new all-time high in about two and one-half weeks. And on that score, we should note that the venerable Dow is also now close enough to an all-time high that CNBC has even started a countdown window. So in short, it was just another day at the office in 2013, right?

Well, not exactly. For starters, the semis came under attack thanks to a some less than enthusiastic commentary out of Seagate Technology's (STX) report, which in turn, kept the NASDAQ from joining in the late January fun. The bears were quick to point out that "the NAZ" hasn't been keeping up with its blue chip brethren of late, which could be a problem going forward we're told. In addition, our furry friends pointed to yesterday's breadth statistics with raised eyebrows. And finally the glass-is-half-empty crowd could be heard telling anyone still listening that they should be concerned about the consumer data and the idea that the Fed just might decide to turn off the printing press sooner than expected.

To be sure, the consumer confidence numbers have come in on the punk side lately. Thanks to our handy State of the Economy report, we see that the Conference Board's Consumer Confidence Index did a swan dive in January, which confirmed the weak readings seen lately from the Bloomberg Consumer Comfort index, which themselves had confirmed the downtrend seen in the recent UofM readings. The takeaway here is the government's decision to start hijacking 2.5% from people's paychecks again appears to have put a damper on the mood at the John and Jane Q. Public residence. And since the consumer is responsible for more than two-thirds of the U.S. economy, well...

Then there is the worry about the Fed and what is being called the "1994 scenario." A Morgan Stanly bank analyst issued a report Monday titled "What I Learned at Davos." In the report, the analyst wrote that there were two overriding concerns coming out of this year's World Economic Forum. The first is the idea that the central banks of the world have used up their slings and arrows, and as a result are now defenseless going forward. And the second is the worry that the Fed might be gearing up for a "super-sized" version of the FOMC's 1994 pre-emptive strike against inflation. And everybody knows that if the Fed starts to hint at raising rates right now, trouble would undoubtedly ensue in the stock and bond markets.

But despite the issues in tech, the worry about the consumer, and the fear that the Fed could pull the punch bowl prematurely, stocks marched merrily higher on Tuesday. How can this be, you ask? Have the traders of the world lost their collective minds? Aren't there big problems still lurking out there?

From my perch, there are two little words that seem to be able to explain away just about all the concerns and worries these days: "Yea, but ..." For example, isn't the consumer data really weak right now? Yea, the numbers are bad, but ... you really need to recognize that these reports reflect the fear that was built up over the fiscal cliff battle. Now that everything is back to normal again in Washington, stocks can go higher.

Aren't there issues with interest rates rising? Yea, rates are rising, but ... they are also rising from an historically low level. As such, analysts tell us the yield on the 10-year could rise another 50-100 basis points before having any real impact on the economy.

Isn't the global economy still barely able to keep its head above water? Yea, it's true that the GDP numbers aren't exactly robust at the current time. But ... since stocks look forward and things are starting to improve just about everywhere, P/E multiples certainly have some room to expand.

What about the concerns over inflation? Won't the "race to zero" in the world's currencies create a big batch of inflation in the future? Yea, it is true that declines in the currencies of our foreign trading partners do indeed tend to "import inflation." But ... in this case, everybody's doing it, so the relative level of the currencies isn't a problem. And besides, a little inflation might be considered a good thing - especially in places like Japan. So, there's certainly no problem here - buy 'em!

In case it wasn't obvious, yes, my tongue has been firmly implanted in my cheek while penning this morning's missive. However, when markets get on a roll like the one we're seeing now, the words "yea, but" tend to be a fitting response to just about every negative argument. Well, until they don't of course. But for now ...

Publishing Note: I am traveling Thursday through Monday and will publish morning commentaries as time permits.

Turning to this morning ... Continued expectations for further easing in Japan pushed Asian markets higher while improving sentiment data in Europe as well as signs that the banking system is on the mend (banks are becoming less dependent on ECB for funding) hasn't been able to push the indices across the pond higher. And U.S. traders appear to be waiting on the ADP Payrolls report, Q4 GDP, and word from the Fed this afternoon. As such, stock futures in the U.S. are holding around breakeven at the present time.

Pre-Game Indicators
Here are the Pre-Market indicators we review each morning before the opening bell ...
Major Foreign Markets:
- Shanghai: +0.98%
- Hong Kong: +0.71%
- Japan: +2.28%
- France: -0.13%
- Germany: -0.21%
- Italy: -2.05%
- Spain: -0.20%
- London: +0.08%
Crude Oil Futures: +$0.28 to $97.85
Gold: +$3.00 to $1663.80
Dollar: lower against the yen, euro, and pound
10-Year Bond Yield: Currently trading at 2.021%
Stock Futures Ahead of Open in U.S. (relative to fair value):
- S&P 500: +0.91
- Dow Jones Industrial Average: +12
- NASDAQ Composite: +5.77
Thought For The Day...

"To be conscious that you are ignorant of the facts is a great step to knowledge." -Benjamin Disraeli

Positions in stocks mentioned: none
Source: Daily State Of The Markets: 2 Little Words Explain Everything