Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

The Numbers Don’t Lie

Folks, this is a big time for earnings—130 of the S&P 500 companies report before the end of the week. These reports coincide with a debt-ceiling debate here at home and a situation where European banks are playing havoc with pricing. Let’s distill this, shall we?

What’s happening in Europe right now all comes down to the Italian 10-year treasury bond—that’s the primary story. If we are to see any relief at all in Europe, it will be manifested in the price of that issue. It’s hovering just under 6% right now. If that yield creeps up to 6.5%, I’d start to worry. If it hits 7%, things could start to break and seize, creating some real dysfunction in the markets.

Keep in mind that Italy is the 7th largest economy in the world—that’s why this story is different than Greece or Portugal. Having an economy that large with a contagion is something that could be very troubling. If that yield spikes, all bets are off. It could even be the beginning of the end of the Eurozone.

Do I expect that will happen? No. I believe the ECB will do as it said and buy up enough of those bonds to keep things in control. This situation will be resolved, just like the situation with the debt-ceiling here at home, which has turned into the typical display of political posturing that precedes many compromises.

While the world wrings its hands about issues of the day, companies are beating the Street left and right. U.S multinational corporations like Bank of America, IBM and Wynn—which are really global companies that are U.S.-dollar denominated—are reporting terrific earnings. This tells me that the global economy is not struggling the way ours is. Coke, for instance, was up 18%. That’s not because their market share grew domestically. It’s because the global marketplace, the spoils of the ideological war, has given them the ability to expand their business like never before.

My good friend Jeff Carter, who’s a wonderful trader, media personality and writes the blog , was on the show this morning. Once again, he was preaching to the choir. His recommendation in a world where the stock market and Main Street are disconnected? Ignore the noise. Put your money in a no-load mutual fund that replicates the S&P 500. Then, in 10 years, look back and pat yourself on the back for having done the right thing.

I think he’s right. The Eurozone will not collapse, and the folks in Washington will not let our credit rating be jeopardized. Growthflation, a once-in-a-lifetime convergence of global growth and inflationary pressure, will drive prices higher across the board for years to come. Now is the time to be on the lookout for value.

Michael Farr also joined me on this morning’s broadcast. Like Jeff and me, Michael is also a CNBC personality—one of the few whom I actually turn the volume up to listen to. He has a book coming out in September called “The Arrogance Cycle,” which examines the mass psychology that parallels boom and bust cycles. Where does he see arrogance in the market right now? Listen to the podcast and find out!

Facebook / Twitter