Friday, October 8, 2010


Bond prices are softening, and yields are starting to rise a bit as stocks flat line.

Just because stocks are undervalued relative bonds, that doesn't mean they're cheap.

Where it stops and if it stops, no one can know for sure. 1.) Just because stocks are undervalued relative to bonds - doesn't mean that stocks are cheap, and 2.) quantitative wheezing is not the panacea for the domestic econmy's structural issues.

Just like in 2007-08, we have embarked upon a slippery slope - both economically and in our capital markets.

Sources call the Microsoft/Adobe talk nonsense.

Upside for Mortgage Insurers?

No more foreclosures could mean a ramp for these stocks.

The mortgage insurers should ramp higher after BAC announced that is putting in a nationwide moratorium on foreclosures.

Of concern was the continued drop in government jobs (even adjusted for the 77,000 Census workers lost) and the flat read in average hourly earnings and average weekly hours.

The report reinforces the likelihood of another round of quantitative easing being implemented in early November.

Bullard Beats Around the Bush on QE 2

St. Louis Fed President James Bullard previously indicated that the Fed was ready to make a QE 2 move if needed.

This morning, he appeared to move off that position slightly.

St. Louis Federal Reserve President James Bullard has previously given an indication to the markets that if the situation warranted QE 2, the Fed was ready to act on it.

Based on the recent advance, the markets certainly seem to be assigning a high probability to a Nov. 2-3 QE 2 announcement.

This morning, he appeared to move off that position slightly.

The risk of double-dip recession has probably receded some in last the six to eight weeks. The economy has slowed, but it hasn't slowed so much that it's an obvious case to do something. A very reasonable decision would be to say, "Maybe we should push it off a meeting or two and see how the data comes in."

-- James Bullard (CNBC interview)

That stated, it's coming anyway at the November Fed meeting.

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