Yields Are Rising, Equities to Face Headwinds

Several weeks ago, I outlined my road map for the next couple of weeks, and this centered around rising Treasury yields.  So far this "call" is looking good as yields on the long bond are starting to show some life after 4 months of being crushed.  Rising yields at the long end of the curve just may be a response to QE2 and the perceived inflationary effects or it just may be the result of a smaller than expected asset purchase program.  In any case, we have rising yields and strong trends in crude oil and gold, and it is this combination of factors that is likely to act as a head wind for equities.

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Morning News Notes: 10.28.10

The morning news notes as prepared by TL....initial jobless claims, Americans worry about making their mortgage payments, more QE2, Bank of Japan, European markets, 1 in 5 voters have yet to make a firm commitment for Tuesday's election, and unemployment rate in Germany.

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Market Musings

The markets are on hold until November 3 when the Fed will announce its intentions of asset purchases to assist the flailing economic recovery.  While we all know this will happen, the extent of the program - how much and for how long - is unknown.  Whether this grand experiment works to stimulate the economy or just "goose" asset prices is another big question mark.  Of course, all this tinkering would seem to increase risks in the eventuality that this program is a failure.  In other words, what happens next if the economy continues to muddle through despite a $2 trillion stimulus?  

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Morning News Notes: 10.25.10

The morning news notes as prepared by TL....recent trends in Xmas spending, G20 and currency devaluations, QE2 and size of asset purchases, White House deficit commission report due in 2 weeks, and economic update from JPM. 

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Investor Sentiment: Lots of Bulls

I always like to say that it takes "bulls to make a bull market".  These are the kinds of market conditions that would best characterize the strong bull runs that started in 1995, 1998, 2003 and 2009.  In each of these time periods, the sentiment indicators became bullish very quickly off the bottom and stayed that way for months on end.  As we end this week, higher prices have brought out the bulls as expected, and for the second week in a row, the "dumb money" indicator shows too many bulls.  Surprisingly, the "smart money" indicator is also bullish at this juncture.  There are lots of bulls and it is reasonable to wonder the following: are we entering a period where bullish sentiment will remain strongly bullish while the markets continue to move higher?

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Morning News Notes: 10.21.10

The morning news notes as prepared by TL....initial jobless claims, economic data out of China, Fed Beige Book, and Geithner comments on the Dollar.

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Morning News Notes: 10.20.10

The morning news notes as prepared by TL....TARP generates 8.2% return for Treasury, US housing starts, Republicans widen lead according to WSJ/ NBC poll, industrial profits slowing, White House investigating mortgages, BAC and China's rate hike.

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