The New York Times in This Time, It’s Not the Economy reports, "The economy is virtually nowhere to be found among the campaign ads of embattled Republican incumbents fighting to hold onto their House or Senate seats. Nor is it showing up as a strong weapon in the arsenal of Republican governors defending their jobs from Democrats.

‘I don’t know of another election cycle in which the economy was so good, yet the election prospects for the incumbent party looked so bad,’ said Frank Luntz, a Republican strategist…

The only place that the economy has emerged as a major campaign theme has been in the aging industrial heartland around the Great Lakes, where the bleak economic prospects are being deployed against incumbents, Republicans and Democrats alike. But where the economic winds seem to be blowing their way, voters appear unwilling to hear that Republican policies made it so…

Moreover, concerned by weak wage growth, costly health care and eroding benefits, many middle-class, voters do not see the economy improving for them…

But, Ms. O’Callahan said, jobs were not enough. ‘I work with job placement so I see up close how a lot more work is demanded of people, how benefits are disappearing, how hourly rates have been stagnant throughout the Bush administration,’ she said. She said that jobs were plentiful, ‘but paying $8 an hour with no benefits.’"

http://www.nytimes.com/2006/10/24/business/24econ.html?_r=1&oref=slogin

Gee, pundits in almost every endeavor believe that the economy is great but US consumers just don’t get it. It would never cross their minds that perhaps the US consumer has it right and the economic data and pundits ‘just don’t get’ the reality of the average American’s financial and economic plight.

And it’s not due to the constant media bashing of Bush. The media savaged Reagan, yet the average American supported Old Dutch in stunning fashion during and after his presidency. That’s because there were material gains for the average US consumers and not hedonic, seasonally adjusted or imputed gains.

Our friends at GATA alerted us to this interesting nugget from Jeffrey Saut, the managing director of investment strategy for Raymond James. In An Eerie Stillness, Mr. Saut writes, "…we still can't shake the "eerie" feeling that something's unnatural about the stock market's action…

Yet there remains an eerie "bid" in the equity markets since those July lows. For example, markets typically rally, then correct by about one-quarter to one-third of that rally's point gain, before beginning another rally phase. After that phase, they again correct by one-quarter to one-third before re-rallying.

This, however, has not been the case recently. Indeed, every time it looked like the indices were about to correct, mysterious buyers materialized in the futures markets…

Even more amazing is that on ALL of those nine trading days, according to our notes, showed that the aforementioned "mysterious" futures buyers were at work with the attendant arbs' action. When we combine this "mysterious" equity action with the "mysterious" re-balancing of Goldman Sachs' (GS/$180.40) much institutionally indexed commodity index (GSCI), from a 7.3% gasoline weighting to 2.5% into the November elections, we find ourselves ‘mysteriously cautious.’"

http://www.raymondjames.com/inv_strat.htm

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