I will be on vacation for the next week so I will give you some tidbits on which to chew.
1) The economy is not yet strong enough to generate broad inflation pressures or for the Fed to remove its gargantuan amount of stimulus.
2) Corporate bonds (and even preferreds) are NOT interest rate products. Many bonds, especially in the bank and finance (and to lesser extent in telecoms and utilities) are trading at fairly wide spreads to treasuries. In a recovery the credit spreads should narrow thereby offsetting at least some of the rising interest rates / treasury yields.
3) Why can some banks get their preferred for equity exchanges launched while others cannot. Be very concerned.
4) Prices at which a stock is trading may not be based on fundamental valuation when an arbitrage situation exists.
5) GM and Chrysler have about as much chance of making money under Mr. Obama's guidance (and with a UAW work force) as I do of becoming the Queen of England.
6) Dick Bove' has lost his grip on reality.
7) Junk bonds are up as overly-optimistic investors reach for yield. They have rallied even while defaults have increased. Stay away.
8) Be very worried about credit card and commercial mortgage defaults.
9) Fixed Income funds are not bond substitutes.
10) TIP indices do not rise just because inflation is positive. They rise when the year-over-year inflation rate rises. Beware of short-term TIPs trading at premiums with very high indices.
See you all in a week.
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