Update on Indicators, Part 2

Helping Institutions and Ordinary People Invest Better by Focusing on Risk Control

Posted on 3 April 20073 April 2007 by David Merkel

I should mention that Assurant has been added to the S&P 500. Could not happen to a more deserving company; they are truly innovators in the insurance industry.

And now, more on indicators, bullish, bearish, and otherwise:

Bullish

Low quality stocks outperformed in the first quarter, according to Merrill Lynch. That’s bullish in the short run, but not the intermediate term.
LBO volume and private equity volume continue unabated.

Bearish

Economy feels like stagflation-lite. Low positive growth, and rising inflation.
Inflation is rising globally, particularly in India and China.
Mortgage interest payments in the US are a record high (since 1989) compared to Disposable Personal Income.
Corporate credit metrics are deteriorating for both junk and high grade corporate debt, but are not critical yet.
Equity REITs seem to be rolling over.

That’s all for now. Tomorrow is another day.
Full Disclosure: long AIZ

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