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Gridlock - a Positive more than QE

With a mixed Congress, it is very likely that gridlock will be the order of the day for 2011 and 2012.  It is very unlikely that the freshman Congressmen will be willing to renege on campaign promises and it is also very unlikely that the Senate and President will undo any of recently passed legislation, especially healthcare.  The markets see this as a positive because uncertainty is no longer in play, gridlock is.  Corporate America and Wall Street prefer certainty and the likelihood of gridlock is more certain than the hopeful success of what Quantitative Easing may or may not bring.

On another positive note, President Obama signaled today that he would be willing to continue a temporary extension of the Bush tax cuts.

Expect the markets to continue on the bullish path based on re-entry of certainty.  Labor data may not derail the positive sentiment as validated today with the continued weakness in labor marked by Initial claims data with more then expected new filings for unemployment benefits.  Unless significantly weak labor data is reported tomorrow, the markets will remain on the uptrend.  So where's the profit taking and correction?  It's not on the minds of the investment community, at least not yet.

Keep an eye open and an ear to the ground.

Disclosure: No positions