The theme over the past 24 hours has been one of a remarkable harmonious dove commentary from the world’s Central Banks, rallying front ends and thus providing a degree of support to equity markets. European bourses closed with solid gains, while the S&P500 also closed higher, albeit well off the highs for the session. Gold is now worth its weight in gold.

Starting in the US, Dallas Fed President Fisher opined that we could see a pause in the US recovery (or at least several quarters of weak growth) while Richmond Fed President Lacker told his audience that it was too soon to say when the Fed would lift rates (he said it could be 2010, but it could take longer). In Europe the ECB’s Wellink said that the world economy was still fragile, a comment that was seconded by ECB colleague Weber. Weber also said that it was presently too early to reverse the Bank’s expansionary measures although he also warned that the right time for exit must not be missed.

Risk markets continue to trade in the sweet spot on a flock of Fed comments (after someone let the doves out) and a slew of bullish Chinese economic data. Looking across markets, most prices are sitting not too far from where they were this time yesterday. Clearly, investors have seen, on balance, little surprise in the latest data and information flow. This included a wall of Fed speakers, several whom took the time to point out that neither inflation nor unemployment were presently indicating a need for the Fed to exit its ultra-easy policy stance. The Dallas Fed’s Fisher did indicate a worry that the Fed’s policy would stoke a destabilising Dollar Carry Trade. Talk is cheap but Treasury Secretary Geithner did say that he “deeply believes” a strong Dollar is important for the US and he has responsibility to implement policies to shore up confidence.

Some US stocks to watch Wednesday include GE (GE), Caterpillar (CAT), Alcoa (AA), Barrick Gold (ABX) (with the yellow metal trading at $1,117) and Exxon Mobil (XOM), all of whom look likely to benefit from the equity friendly news from China overnight. Other stocks likely to be active include Adobe Systems (ADBE) who are shedding 9% of their workforce, and builder Toll Bros. (TOL) who said that Q4 contracts have risen.

Risk appetite was back with a vengence Monday as the Dow made new year highs on back of Wells Fargo upgrading chipmaker forecasts, merger news (Comcast (CMCSA) and NBC) and even the return of LBOs (Northrop Grunman (NOC)). General Electric (GE), Caterpillar (CAT). Barrick Gold (ABX) and Intel (INTC) gained at least 2.1%, while the dollar weakened against 15 of 16 major currencies. The VIX has lost nearly 10 points in a week. The MSCI Emerging markets index has gained 6% in four days, its best run since July.

In the absence of any significant economic news (and in particular, any significant bad news), it seems that markets have just reverted back to auto pilot risk-seeking mode. To some extent, markets seem to have been comforted by the communique from G20 Finance Ministers over the weekend, which noted that “to restore the global economy and financial system to health, we agreed to maintain support for the recovery until it is assured.”

Markets seemed a little confused on Friday following the release of the October non-farm payrolls report. And that’s not surprising, as the report had something for everyone to latch onto to support their respective bullish or bearish views. Most neutral of all was the headline outcome – the 190k decline in non-farm payrolls was little different to market expectations. Bulls would note that this followed 91k of upward revisions over the past two months, whilst bears would note that the October report saw more job losses than in August (although less than in September). Bulls would counter that the trend since the beginning of the year is certainly one of declining payrolls losses, whilst bears would note that the household survey has recorded very heavy jobs losses over the past three months (averaging 589k), thus a rise in the unemployment rate to 10.2% – the highest since April 1983.

US stocks in the spotlight Monday include tobacco giant Altria (MO), whose price target was raised to $27 at Morgan Stanley, citing possible cost cutting and price rises. Gold and basic resource stocks will doubtless follow their European conterparts higher (ABX, Newmount Mining, Freeport-McMoran (FCX)). McDonald’s (MCD) is getting some positive attention after its £10 million deal with the English FA, while Citibank (C) and Bank of America (BAC) are both bid in early trading. Retail stocks RadioShack (RSH) and Abercrombie & Fitch (ANF) are both in favor, the former after announcing that it is to sell Apple (AAPL) iPhones at some stores, while the latter in benefitting from a Credit Suisse broker upgrade to a “buy” rating. Gap (GPS) is moving in the opposite direction as it was cut to “equal weight” at Barclays.

After what was a yawnfest Friday morning, the afternoon session started with the key Non Farm Payrolls which were weaker than expected across the board. Payrolls fell -190k vs. the -175 the market expected. The Household survey showed a dramatic decline of -589k and the U.S. unemployment rate shot up to 10.2% (a 26-year high). Manufacturing, construction and retail trade all showed bigger losses in jobs than expected. In fact, the only reason payrolls did not fall further was the increase in government employment. Hours worked failed to increase, which is a major negative as it means that employers are nowhere near the hiring phase. The length of unemployment is at an all time high of 26.9 weeks.

There was also a big jump in temp jobs (i.e. skilled workers serving burgers and fries at McDonalds (MCD)). Average hourly earnings were up 0.3, which will trigger some concerns about inflation pressures building, but Washington will be concerned about this payrolls number and I would not be surprised to see some kind of job tax credit being discussed to incentivise employers into hiring. In my view, this completely takes off the table any hint of higher rates or reduced liquidity provisions until late 2010 or even into 2011, as the Fed specifically told us Wednesday that they were looking at slack in resource utilisation (employment) as one of their key triggers. And if you thought that was gloomy, the doomiest among us are obsessed with U-6, also known as The Real Unemployment Rate, because it measures discouraged workers who aren’t actually looking for work. Anyway, that number soared to 17.5% from 17% last month. That’s a huge month-over-month jump.

The reaction of markets to what most regarded as a dovish Fed statement was disappointing. The Dow was up 156 points at one stage but ended almost unchanged with selling heavily into the close. Financials were the big losers after a House vote limited credit card rates which would impact bank earnings. I still feel the equity market is being very complacent about tomorrows US non-farm payrolls number report (consensus forecast -175k). Reading through the entrails of the employment components of yesterdays ISM services report, the number should be around -300k.

Data wise from the US thus far Thursday has been unambiguously positive with much better than expected non-farm productivity numbers and lower than expected unit labor costs. This combined with a bigger than forecast fall in the weekly jobless claims to their lowest level since January should give an early boost to risk assets

The S&P 500 managed to eek out a 0.2% gain overnight Tuesday, largely thanks to the industrials and basic materials sectors, together with an M&A-driven jump in the transport sector as Warren B. plays Texas Hold’em and goes all in on the future of the US economy. Considering the pressure that the US equity market was under at the open, many investors will see this price action as somewhat encouraging.

Stocks have started on the front foot Wednesday with insurer Hartford Financial (HIG) lifting its profit forecast after beating Q3 expectations. Alcoa (AA) is also on the rise, and Time Warner (TWX) is up on reported EPS of 61c versus Street estimates of 54c

Given the slew of positive economic data Monday, you might have been forgiven for expecting a decent rebound in risk assets. There was a rebound of sorts in early New York trading, with the Dow up close to 150 points at one stage. But the rally lost momentum and was largely undone. Indeed the Dow traded in the red for a period.

Perhaps in part, this may have been due to comments made by a Fed official Jon Greenlee who told a House of Representatives Oversight and Government Reform subcommittee hearing that “credit losses at banking organisations continued to rise, and banks face risks of sizable additional credit losses given the outlook for production and employment… Poor loan quality, subpar earnings, and uncertainty about future conditions raise questions about capital adequacy for some institutions." More generally, fears about loan quality were corroborated overnight by the news that business bankruptcy filings jumped in October, reversing two months of declining commercial filings. Overall, the price action looked pretty poor to me. I’d have expected a much more positive reaction to the numbers yesterday

Friday was a frightening day for stocks as the exuberance seen on Thursday following the GDP report evaporated following a weak US consumer sentiment reading and amid CIT bankruptcy fears. The Dow experienced its largest one-day fall (-2.5%) since late April, while the S&P and Nadsaq also shed more than 2.5%. Leading the decline were financials. Weighing on sentiment was also investor Wilbur Ross’ warning that a “huge crash in commercial real estate” was beginning and comments from analyst, Michael Mayo, that Citigroup (C) may have a $10 billion writedown of deferred tax assets in Q4. Volatility has resurfaced, rising back to early July levels,and now hovers above 30. Other markets followed in due course with risky currencies selling off, driving gains in the dollar and yen. The NZD, CAD, SEK, AUD and BRL all fell in excess of 1.5% for the session as the USD rallied.

The data Friday showed that US consumer spending fell 0.5% month-over-month in September, the largest drop since December, after a 1.4% increase in August. The decoupling between US consumer spending and the manufacturing PMI is startling. Of particular interest this week will be US consumer credit and Non Farm Payrolls. Consumer credit has been falling for seven months in a row (i.e. redemptions have outpaced new lending).

The Dow jumped 132 points Thursday as there was a bout or renewed optimism about earnings which continued to escalate. Travelers (TRV) led the benchmark, soaring 7.7% on Q3 profits which more than quadrupled. Bellwether stocks like 3M (MMM) and McDonalds (MCD) also beat up analysts' estimates, while Amazon (AMZN) impressed after the bell as their Kindle eBook reader is proving a real winner and outselling rivals. Wells Fargo’s (WFC) shares rebounded after investors took another look at the bank’s third-quarter earnings from mortgage servicing rights.

Today’s highlight thus far earnings wise has been Microsoft (MSFT) who, after the rollout of its new Windows 7, came in with an 8c beat on Street EPS estimates. Ingersoll-Rand (IR), Whirlpool (WHR), Honeywell (HON) and Schlumberger (SLB) have also reported better than expected numbers for Q3. So the song remains the same and it looks like tech will be well supported Friday. Interesting that American Express (AXP) said customers reduced spending 11% in the third quarter, sending its quarterly net down 21%. Commercial lender CIT (CIT) is liable to be bid up on a DJ News report that they have reached a tentative agreement with the devil, aka Goldman Sachs (GS), over a disputed $3 billion financing agreement. The S&P 500 is now trading at its highest level relative to reported earnings in the last five years.

It's turning into one of those, “You gotta know when to hold ‘em , know when to fold ‘em” periods, as stocks slipped late Wednesday on the banana skin of a Wells Fargo (WFC) downgrade to a “sell” from CNBC regular Dick Bove, who expressed concerns about “a serious erosion in the bank’s loan quality.” The stock lost 5% and dragged financials down in its wake. Amgen (AMGN) and eBay (EBAY) also disappointed after the bell. It really feels like the equity markets are starting to hit the saturation point. Valuations looked stretched and despite more “better than expected earnings,” it was the outlooks that are worrying me. The shock and awe of stronger-than-expected outcomes is dissipating and the onus is shifting back to the data.

The dive in US equities in the final hour of Wednesday is not an attractive set-up from a technical perspective, either. Firstly, a new high for the year was made early in the day, and then the S&P500 index closed on its low, below the range of the previous day and in fact the low for the last week. This is a key day reversal pattern and suggests significant fatigue and portends a period of retracement. The market is also displaying fatigue in that earnings reports have generally been upbeat and yet the market fell.

Data dumped a few inches of reality rain on the earnings plastic surgery laden beauty parade Tuesday. Further positive “earnings” results failed to sustain a move higher in risky assets (equities). We seem to have reached a point where traders have become so saturated with high expectations (which are miles north of what the laggard “analysts” had projected) that even “good” numbers are greeted with a poor reaction.

Thus far Wednesday, on a hump day, the earnings reports have been a far more mixed bag with the biggest drag being Boeing (BA), after reporting chunky charges of $3.5 billion due to delays in the unfortunately named 787 Dreamliner and 747-8 jumbo jets, while Eli Lilly (LLY) beat estimates. The big banks again have profited courtesy of the taxpayer giving them free money to play with as Wells Fargo (WFC) and Morgan Stanley (MS) (despite a 94% drop in profits) both beating analysts dumb and dumber’s (guess)timates. They’d have been closer using a dart board.

Traders clearly found much to be positive about in their weekend readings for markets, which begun the week on a very positive note Monday. Key European bourses reversed Friday’s losses and the S&P 500 hit another new high, lifted by solid gains in industrials, utilities and consumer cyclicals after the release of further Street-beating earnings reports and some positive broker commentary. And to top it off, Bloomberg is reporting that PIMCO, the world’s biggest bond fund, is considering starting up a stock fund. Apple (AAPL) was the star of the show after the bell eclipsing the expected $1.42 EPS with a $1.82 print. The stock was up 8% after hours.

The positive tone seen in equity markets has carried through to other markets. Commodities are up across the board, perhaps helped by Monday’s comments from China suggesting that data due later this week will affirm that it is on track to achieve its growth target of 8% for this calendar year. Credit spreads have narrowed and the VIX has closed at a new low. In FX markets we have seen a further general weakening in the Dollar, with the stand-out performers being the Kiwi and the Aussie Dollars. The former is up an especially impressive 2.2% over the last 24 hours and is now up 52.9% against the US Dollar since risk attitudes turned positive in early March.

For those of us of a certain vintage, today is the 22nd anniversary of Black Monday, when our first fling with computerised trading ended in tears.

But that was then and the market has no memory, so fast forward to a week when approximately 25% of the S&P 500 are slated to report. So far this season, top-line numbers have been encouraging risk appetite. Of the companies which have reported, two thirds are beating on revenues, while last quarter only 40% of the S&P outperformed on revenues.

After opening weaker Thursday, US equities closed marginally higher, led by the communications and energy sectors (the latter boosted by a $2 rise in crude). Tame inflation numbers, better weekly jobless numbers and a surge in the Empire Fed survey (to its highest level since 2004) also helped drag the US indices above water. After the bell we had solid results from Google (GOOG) (helped it join the 52-week high club) and IBM (IBM) (though their comments on corporate IT spending is a worry). The US banking reports beat surveyed expectations, but this was evidently well priced in and failed to provide a big enough beat for rapacious investors.

The embattled Dollar is getting a lift Friday from a Bloomberg story saying that the Brazilian government may introduce a tax on foreign capital inflows to curb its currency versus the Dollar.

Groundhog day at the New York Stock Exchange as UBS (UBS) legend Art Cashin got to wear his new “Dow 10,000” hat after a slew of stellar Q3 earnings reports and better than expected retail sales numbers. But maybe it might be illustrative and enlightening to compare and contrast where we are now versus March 29th, 1999 as Cody Willard at Fox Business has done:

“The first time we crossed this 10k threshold, the biz headlines included Microsoft (MSFT) defending itself against Netscape/DoJ, the Fed Funds rate was at 4.75%, unemployment was at 4.4%, our national public debt stood at about $6.5 trillion and Lil Timmy Geithner was Under Secretary of the Treasury for International Affairs (1998–2001) under Treasury Secretaries Robert Rubin and Lawrence Summers. Summers was his mentor, but other sources call him a Rubin protégé.

US equity markets closed modestly in the red Tuesday. But, continuing the theme seen in Q2, Johnson & Johnson (JNJ) reported better-than-expected earnings on slightly worse-than-expected revenues, leading the healthcare sector lower on the day. Consumer cyclicals took some heart from the latest weekly chain store sales report from the ICSC, which showed sales up modestly for a third consecutive week. This was despite the fact that the latest IBD/TIPP economic optimism index showed that consumer sentiment had fallen to its lowest level since July.

Consumer (and of course tech) stocks have taken further heart today from Intel’s (INTC) Q3 earnings report, which was released after the close last night. Equity futures have rallied strongly as the company reported better than expected earnings and revenues, together with a forecast for Q4 which also handily beat market expectations. Note the high end of the company’s guidance for the next quarter would have margins better than that of the tech bubble. In sympathy with Intel’s mega impressive numbers, Euro tech names STMicroelectronics NV (STM) (Europe’s biggest chipmaker) advanced 3.8% and Infineon (IFX) (the second-largest chip maker) mirrored that rise.

The Dow broke out to a new 52-week high yesterday with the S&P 500 not far behind it in light trading. The major support came from tech names after upgrades by Deutsche Bank of the semi conductor sector and Barclays of the hardware space while the VIX declined to 23, a one-year low.

More importantly and raising a few eyebrows today is news that the day before they report earnings, Goldman Sachs (GS) was cut to Neutral by the now independent uber bank analyst Meredith Whitney. Recall her “buy” call just before last quarter’s results was right on the money (and of course her now famous call on Citibank (C) in 2007 when she foresaw a dividend cut and said they were in big trouble). Expect some softness on the back of this as when the Laura Croft of financial analysts speaks, folks listen.

Yesterday saw a trifecta of better than expected earnings, encouraging weekly jobless and continuing claims numbers and news that chain store sales (yes, you guesses it) beat expectations. This all helped US equity indices to a 0.6%-0.7% gain. Homebuilders rallied as Congress mulls a possible extension of the $8,000 first-time homebuyer’s tax credit, which is set to expire on Nov. 30.

Of the results to have trickled out so far (31 of the S&P 500 companies) 74% have beaten “consensus” (fire the analysts, I say). Early days perhaps, but nonetheless consistent, with the bulls forecast for another positive earnings season that supports risk and chips away at the dollar. All is not plain sailing of course, and Japanese machinery orders data overnight provided another reminder that global manufacturing data is losing momentum (+0.5% actual vs. +2.1% consensus). Risk markets are thus caught between two countervailing forces at present – “earnings” vs. mixed and patchy economic data. Concern that economic growth is relapsing will moderate the extent of the risk rally. As for today, early indications are that players are looking to book a little profit and take some money off the table. With the Columbus Day weekend coming up in the US expect volumes to drop off a cliff come mid-afternoon.