U.S. equity markets all but shrugged off a relatively weak run of economic data last week, finishing down slightly. The Federal Reserve weighed in as well last week, signaling that it was planning to end its Treasury purchase program in October. Otherwise, the statement from the Federal  Open Market Committee (FOMC), the Fed’s policy making arm, provided few clues as to how (or when) the Fed will begin to remove the policy stimulus it has put into place over the past 18 months or so. This debate will likely dominate the investing landscape over the next six to nine months.

On balance, last week’s economic data came in on the weaker side of expectations, that has been the exception, not the rule lately. Prior to last week, roughly two-thirds of the economic data released over the last two or three months has come in above expectations. The weaker – than expected data released last week doesnt change our view that the recession ended in late Q2 2009 or early Q3 2009 and that a recovery is now underway. The market is still debating the pace, shape, and sustainability of the recovery.

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