No markups this month/quarter.

The weight of the world is on the S&P 500 above or below 1,040.

And that view is tomfoolery!

An 8.7% earnings yield seems very attractive vs. a 2.95% return on the 10-year U.S. note and no return on cash.

Right now, there exists numerous P/E multiple deflators and nontraditional headwinds to growth. The following factors don't necessarily prevent an extended bull market, but they most certainly have deflated P/E multiples -- the S&P 500 now trades at only 11.5x 2011 forecasts -- and may have put a cap on the market's upside potential:

* rising taxes;

* fiscal imbalances in federal, state and local governments;

* the absence of drivers to replace the prior cycle's strength in residential and nonresidential construction;

* the long tail of the last credit cycle (Greece, Portugal, Spain, etc.); and

* inept and partisan politics.

While there are headwinds aplenty (some gale-force), they are now mostly well-known and arguably have been incorporated in more measured market and economic expectations, as the notion that "it's different this time" has become an accepted view.

With benign inflation and near-historic lows in interest rates and with most measures of business activity still signaling moderate growth ahead (as Jim Grant wrote in Minding Mr. Market), to some degree, it can now be argued that the equity market is traveling the path of fear rather than the path of fundamentals, as emotions and a crisis in confidence have overwhelmed good corporate profits growth, strong productivity gains and rock-solid corporate balance sheets.

Importantly, the S&P now provides an 8.7% earnings yield (the inverse of the P/E ratio), which seems very attractive against a 2.95% return on the 10-year U.S. note and no return on cash. That differential between the S&P's earnings yield and other interest rates is among the widest in decades.

Jim Grant reminds us that investors are typically greedy when they should be fearful (e.g., spring 2008 and two months ago in late April 2010), and perhaps now, as was the case at the generational low in March 2009, they should consider being more greedy when others are growing more fearful.

Over the past few days, many individual equities have approached or are approaching increasingly attractive entry points as fear has overcome many market participants.

As one of the most savvy participants in the hedge fund community suggested last night, Mr. Market himself is looking cheap. According to this person, the market, in the aggregate, is currently discounting a double-dip and is pricing in 2011 S&P earnings at about 25% less than consensus.