The New Goldilocks: No Inflation, No Crises, And An Endless Liquidity Pump From The Fed (SPY)

Prior to the crisis, the idea of a Goldilocks economy referred to a state of not-too-hot, and not-too-cold growth that was easy and comfortable for the bulls.

We may find ourselves in a Goldilocks market yet again, but it's obviously taken a different shape. After all, growth is not the story. And nobody fears inflation. And a slowdown is not the only fear -- now markets fear a crises relapse as well, whether it's a new banking crises, or more recently, a sovereign debt crisis.

So the new Goldilocks consists of a state of no crises (governments are there to backstop everything) and endless liquidity courtesy of global central banks. Take yesterday: Despite all the bad macro news, a timely article in the WSJ hinted that the Fed would turn on the money spigot soon enough if necessary.

So if you think this is sustainable, and that the Feds can make money cheaper and cheaper, while simultaneously preventing crises, then who needs growth anymore?

At least that seems to be the bull thesis. On the other hand, the Fed will have to do a better job than Japan did to pull this off.

Don't miss: 17 reasons to be bullish >

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