It looked like the train was coming off the rails on Thursday, only to resume full steam ahead on Friday. It’s easy to be skeptical: the negatives are well known and well articulated by most.
Take the facts to understand why 1270 is more appropriate than 1230, the upper and lower parts of our range around the 1250 average.
The Europeans have said that bond holders don’t have to worry about a sovereign default. They have set up a US style TALF before a credit shock like Lehman has occurred over there. A grand bargain is mythical. All we need is for Lehman to be taken off the table, so we know now that the headline inspired dips can be bought without fear of the never ending decline that keeps us from being aggressive or pulling the trigger altogether. We have that now with the agreement to enforce debt limits as a percent of GDP and the relinquishment by Germany of demands for private sacrifice in sovereign debt haircuts.