Sweet Spot between Stimulus and Austerity

Yesterday’s market action would appear to be a little bit of excess at the end of the road.  No doubt we are still feeling a tail wind from some of the stimulus for the past three years but the worm is turning and the rush to austerity and higher interest rates is waiting in the wings regardless of who wins the election.  The Democrats in congress missed their chance prior to 2010 to be real leaders and tackle Social Security and Medicare and tie those reforms to a much bigger long term stimulus package.  Now the easy path is for both parties to chase the other down the austerity trail.