27-Aug-10 -  Market Monitor: How Now Dow Dividend Payers?
Just like the U.S. government, the companies in the Dow Jones Industrial Average are not going out of business anytime soon; only most of the Dow companies offer a better yield and more attractive, long-term capital appreciation potential than U.S. Treasuries. In fact, 24 of the 30 Dow components have a dividend yield that exceeds the yield on the 5-year Treasury note while 18 of them have a dividend yield that exceeds the yield on the 10-year Treasury note.

13-Aug-10 -  Market Monitor: Certain about Uncertainty
The Fed added to the market's uncertainty in the past week, not so much in our estimation with the decision it made, which is supportive for risk assets, but by the seemingly confused manner in which the Fed arrived at that decision.

As the uncertainty looms, the stock market will remain volatile with risk trades placed one day and taken off the next. Nonetheless, against a backdrop of low inflation that is going to remain low, low interest rates that are going to remain low, earnings that will continue to grow, and a Fed that is endorsing risk, the stock market still has its appeal.

06-Aug-10 -  Market Monitor: Risk on, Risk off
The stock market is riding a wave of sentiment where the risk trade is on one day and off the next. While this condition is apt to persist and lead to a range-bound market, we see a benefit in utilizing a barbell strategy in the near term where positions are increased in cyclical sectors when the risk trade is off and positions are increased in counter-cyclical sectors when the risk trade is on, taking advantage of price weakness in both instances.

Although there is still a good deal of uncertainty to deal with, things are less bad than they were a few months ago when stock prices were higher. That condition, coupled with reasonable valuation and low interest rates, is why we would continue to be long equities.

30-Jul-10 -  Market Monitor: It Is Earnings Appreciation Day
Ahead of the June quarter earnings reporting period, the stock market got tripped up on concerns about the earnings outlook. With roughly two-thirds of the S&P 500 having reported earnings results, it can be said that those concerns were overblown.

While we are not pounding the table on the stock market outlook (yet), we are not cutting the legs out from under it either. We cannot because the earnings growth is too solid to do so.

09-Sep-10 -  Data Detail: Jobless Claims (Sep 4), Trade Balance (July-10)
While the initial claims level remains bounded between 450,000 and 500,000, which has been the case since the middle of November 2009, the move toward the lower bound brings added hope that the labor market is finally showing signs of breaking out of its malaise...The paradox of strong GDP growth yet weak economic demand may come to fruition in the third quarter as the net export sector surges ahead.

03-Sep-10 -  GDP Monitor: August 30 - September 3, 2010
The economic data were clearly disappointing last week. Things quickly changed this week, though, as better-than-expected consumption, manufacturing output, and employment data reversed the needles and pointed back toward a stable recovery.

03-Sep-10 -  Data Detail: Employment Report - August 2010
After reading through the details of August's employment report, it is clear that the labor market, while still sluggish, is improving at enough of a clip that it should prevent a double-dip recession.

02-Sep-10 -  Data Detail: Jobless Claims - August 22 - 28, 2010
The labor market continues to run in place as claims remained bounded between 450,000 and 500,000 as they have been since the middle of November. There is nothing in the labor data that suggests substantial job growth is on the horizon, but there is some inkling that new firings may fall in the near future.

07-Sep-10 -  Fixedated: August 30 - September 3, 2010
Treasuries were whipsawed last week as the 10-year Note and the 30-bond Bond traded within spreads of more than 29 bps and 36 bps, respectively.  High-yield corporates rallied a bit while investment-grade company debt followed Treasuries and ended the week slightly off after moving through the 4.00% yield level earlier in the week.  Munis were relatively unchanged on light supply.

30-Aug-10 -  Fixedated: August 23 - 27, 2010
Treasuries sold off hard last Friday after rallying to yields not seen since January 2009.  The ML U.S. 7-10 Yr. Corp. A Index yield fell to 3.93% -- within 8 bps of its all-time low -- before ending the week at 4.09%.  Muni yields continued to grind lower as demand outstripped light supply.

23-Aug-10 -  Fixedated: August 16 - 20, 2010
Yields, in general, continued to trend lower indicating concerns about a big equity sell-off and/or another freeze in the credit market IF, in fact, the bond market is correct.  The 10-year Treasury made a push to 2.50% late last week while the 30-year briefly broke the 3.60% mark.  The continued move lower in yields is concerning on a number of levels.  One concern we think is underappreciated, though, is the interest rate risk.  Corporate yields also headed lower as the ML 7-10 Yr Corp A Index pierced 4.00% for the first time since June 2003.  Muni yields dropped again as investor demand outweighed supply.

16-Aug-10 -  Fixedated: August 9 - 13, 2010
Treasury yields moved substantially lower last week on weak economic data, deflation concerns, double-dip talks and the Fed's announcement that it would keep its balance sheet constant by using MBS proceeds to buy Treasuries.

Corporates ended the week mixed as investment-grade bonds grinded lower and high-yield debt continued to give up ground.  Johnson & Johnson's issued debt at record low yields last week.  However, the real story was the spread at which the deal got done. When JNJ issued 10-year debt in June 2008, it did so at a spread of 103 bps. This deal came at +43 and traded down to +15 for block size on Friday.

The FactSet 10-year muni index has dropped 28 bps in six weeks and is once again over 100% as a percentage of Treasuries as participants have snapped up the limited high-grade supply.

01-Sep-10 -  Trend Watch: August 16 - 27, 2010
In this Trend Watch, we discuss the relationship between earnings growth and the safety trade, homebuilders outperforming the market despite very weak housing data, and the potential effects of "hardship withdrawals" from retirement accounts.

18-Aug-10 -  Trend Watch: August 2 - 13, 2010
In this Trend Watch, we discuss U.S. Treasuries and China, the potential for deflation and for a double dip, the details of the rebounds at GM and Chrysler, and using "apps" for data collection.

17-Aug-10 -  Financial Review: Slowly Improving Credit and Lending Market
Two releases yesterday, the Federal Reserve's Senior Loan Officer Opinion Survey on Bank Lending Practices and trust data from credit card companies and banks, point to a slowly improving credit and lending market.

04-Aug-10 -  Trend Watch: July 19 - 30, 2010
In this Trend Watch, we are calling attention to the potential effects of government layoffs at the state and local level to the national unemployment rate, the Federal Reserve's options regarding its mortgage-backed securities' holdings, renting versus owning a home, and a proposed California tax change that could have a national impact.