Daily Investment Interpretations

December 8, 2010

2010-12-8 (Wednesday Night): The markets closed up a little today: Street shakes off losses. The NASDAQ Composite gained 10.67 points (0.41%) to 2,609.15. The Dow fell 13.32 points (0.12%) to close at 11,372.48, and the S&P 500 sprinted  4.53 points (0.37%) to close at a new 2010 high: 1,228.29. Oil slipped up to $88.84 a barrel, and Gold declined to $1,387. The VIX crept down 0.25 to 17.74.
    It turns out that the tax cut bill is really a "stealth stimulus bill": Tax Deal Really a 'Stealth' Stimulus Bill   ... one that will pump about $800 billion into the economy over the next two years. This is about equal in size to the original 2009 stimulus package, and combined with QE II, should carry the economy over the ridge to a full recovery. But even if it doesn't, this signals that politically manageable ways can and will be found to keep the economy from imploding. One way or another, we will return to full employment, and an economy in which the Federal Reserve is back in control. So a rising stock market is in the cards.
    Dazzling, but dangerous  After monumental run-ups, this doesn't look like the best time to buy gold, silver, or copper. And as if right on cue: Gold, silver losing mettle as the dollar rises. 
    Bonds in deep retreat  Interest rates have skyrocketed from about 2.5% for 10-year Treasuries to about 3.24%. The reason for this rise in interest rates is concern over the effects of this next phase of federal stimulus on the federal deficit. However, this also pricks the bond market bubble, and diverts money from bonds to stocks. 
    Because of the fiscal stimulus and the resulting increase in deficit projections, QE3 unlikely after tax deal .
    Reawakening to Russia  Russia is coming back into fashion as an attractive investment play.
    Stock market futures are up about 0.4% tonight.