How much austerity does it take to slow the economy?
-Jason D. Pride, director of investment strategy, Glenmede

- Even with the sequester hanging overhead, stock markets continue to make new highs or work towards them. Equity markets appear to have brushed off the effects of government paralysis, at least for now.

- Exuberance about equity market reflect their relatively fair value compared to safer alternatives,
bringing claims of “rational exuberance” from a past Fed Chairman and leading many to suggest the
great rotation is occurring. Valuations may be fair, but sentiment appears to less rational than normal.

- Leading indicators suggest a slowdown of economic momentum is in the offing, providing a sharp
contrast to the statistics more commonly watched by the public and media.

- The Federal Reserve meets this week. There appears to be some debate as to where the Fed’s focus is at the moment; is the FOMC more concerned with stimulating economy, or have they started to look ahead and examine if now is the time to be lifting their collective foot off the accelerator?