The stock market received the pep talk it wanted to hear from Ben Bernanke last Friday.  The Fed Chairman's prognostication that "the economy is indeed on the verge of recovery" and that "prospects for a return to growth in the near term appear good" pushed the S&P 500 to a calendar year 2009 closing high of 1026, producing a gain of +15.6% YTD (total return).  Even more impressive though is the stock index's +53.3% return for the last 5 ½ months.  The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the US stock market (source: BTN Research). 
 
The optimism so evident on Wall Street cannot eliminate all the dark clouds that exist in the financial sky.  Four more banks failed last Friday, requiring federal intervention.  The 80 bank failures YTD in the US is the highest annual total since 1992 during our country's savings and loan crisis (source: Federal Deposit Insurance Corporation).    
 
Future spending for health care reform and proposed tax cuts for the middle class may become just a little harder to negotiate after tomorrow (8/25/09) when the Congressional Budget Office will release a 10-year forecast (i.e., for the years 2010-19) that is expected to show an estimated $9 trillion of deficits.  The last projection by the CBO had pegged deficits to be $7.1 trillion for the upcoming decade (source: CBO).