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July 14, 2010


Like the post, agree with you for the most part (though I probably still worry about Money supply and velocity. I am not so hot on munis given the state of municipal finances but not my asset class. Regarding stocks - don't know from where but the market is smelling a November defeat for the democrats, a possible reform of social security (a move towards means testing which Erksine Bowles tried to do under Clinton), toothless financial reform, and some extension of the Bush tax cuts. Any combination of these could support a substantial rally.
And, as your analysis validates, cash may be king but we still have core inflation which drives income growth which drives earnings which drives stock prices.

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