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The direction of the market today and moving forward will be determined by which factor the market views more critical. Will it be the prospect of new creative stimulus employed by the Federal Reserve Chairman, Ben Bernanke, or will it be the ominous slowing of GDP growth.

Real GDP rose 1.5% in the second quarter, the slowest pace since Q3 2011, though it was better than the 1.2% growth expected by economists surveyed by Econoday. The rate represents a significant slowdown from the first quarter's similarly slowing pace of 2.0% (revised from 1.9%). The American economy is a big ship, and before she can stop or turn, she must slow. Well, the slowing is starting to get real for investors, and so all eyes are keyed on the pilot's quarters.

Some say the efforts and the economic guidance of the Federal Reserve have helped to stave off a second great depression, and others argue that the efforts of the Fed are fruitless, and in fact lead us into bigger mess, ala the stock market and real estate bubbles of the last two decades. The next bubble appears to be in U.S. treasuries, but if that one blows, well then it all might be over. If interest in U.S. treasuries disappears, the depression that follows will be rivaled by no other time in U.S. history, in my view. In that case, with the dollar devalued, perhaps only gold will draw interest. Gold has in fact been my favorite investment idea for nearly 10 years now, and the performance of the SPDR Gold Trust ETF (GLD) reflects the direction toward the disastrous end I just depicted.

I've been arguing that the Fed is out of bullets for five years now. What it has been fighting with is band-aids, but the wound has not healed behind its temporary cover. As a result, I see confidence in the Fed chief fading. You can see rally in the SPDR S&P 500 (SPY), SPDR Dow Jones Industrials (DIA) and the PowerShares QQQ (QQQ) in anticipation of Fed speak. Still, when we look ahead, we see a cliff's edge getting closer and closer. Our pace seems to slow at times, and it seems we might turn at times, but it's all an illusion, because we continue to head toward that cliff.

Regarding cliffs, the Fed Chief rightly points to fiscal policy for the medication the economy and the market needs to heal. And as the "fiscal cliff" approaches, our doctors continue to quarrel about how the surgery should be performed. Americans should be demanding of their Congressmen today to resolve the issues that will otherwise be pushed forward to the midnight hour.

Fear of the fiscal cliff is keeping businesses and individuals from planning and spending today, and it will increasingly cause trepidation for stocks. We cannot expect our banks to do anything but sure up capital, and so they do. Yet, in Congress, our leaders prefer to criticize Bank of America (BAC) and J.P. Morgan (JPM), and to interrogate them on the issues that have plagued them recently. That is fine; but also fertilize the ground with sound fiscal policy and give them the tools to fuel economic growth. Otherwise, our nation's greatest companies will suffer, because Europe and China will not be enough nor able to sustain them. So, General Electric's (GE) goods will find fewer buyers and Wal-Mart's (WMT) prices will not be cheap enough. The evidence of this is clear by the latest quarterly performances of Starbucks (SBUX), McDonald's (MCD) and Yum! Brands (YUM), which each disappointed investors due to shortfalls in their Chinese business.

So, in the battle royal pitting the latest GDP data against the Fed champion, GDP must win. Our only responsibility is to make him into a good champion.

Source: GDP Vs. Bernanke