THE BASIS POINT

Fundamentals 7/22

There are no releases of economic fundamentals today. Data this week was mixed. Wall Street seems fixated on the budget process. The things which will determine where markets go from here are: 1) 2Q2011 advanced GDP which will be released 7/29 and 2) perception regarding any Eurozone defaults.

It is worth mentioning that while there will be much politically based discussion about jobs the fact is that Keynesian solutions (deficit spending) attack cyclical unemployment (the usual ups and downs resulting from business cycles) but what we have now is structural unemployment – especially for those unemployed more than 26 weeks. Structural unemployment occurs when there are jobs but the jobseekers do not have the right skills for those jobs.