Thoughts

Cisco's Dividend Isn't Big News

It's just a sign of a maturing company.

A sensible acquisition would be more meaningful.

Unfortunately for the big banks, the combined impact of financial regulation, a weak small business lending environment and an hospitable and cheap debt market, which allows the largest companies to bypass the large money center banks will all contribute to:

1. lower returns on invested capital;
2. reduced earnings power; and
3. a more sluggish profit recovery than previously expected.

It is hard to explain the early strength in bonds today.

Is the U.S. economy getting stronger?

And are the non-U.S. economies getting weaker?

I envision a lumpy and inconsistent period of economic growth.

In some reports, it will look like we are reentering the recession (month-ago series of statistics), and in some periods, it will look like we are exiting a soft patch (last two weeks).

In reality, we are simply in a moderating economic expansion, and there will be no double-dip.

That said, it will remain hard for investment and corporate managers to navigate.

Run, don't walk, to read about the economy according to Warren Buffett.

But be careful to accept his inspiring words as gospel, as he has been wrong before (see late October 2008).

As well, his portfolio of companies is among the largest and brand-leading in the world. His book doesn't face the issues confronted by small businesses, which reported continued weak confidence numbers this morning.