The Stock & Bond Markets -
The stock market is absorbing a lot of mixed signals including retail spending by the consumer. For example, WalMart had the first year-over-year sales decline in 10 years while Target exceeded analysts expectations. Or, consumers spent less on computers than was projected but Amazon.Com said 6 of the top 10 sellers from their company were Apple Computer products. Add to this a slowing in manufacturing for the first time in 3 years thanks to a substantial slowing in the auto and homebuilding industries and, while there's plenty of strength in the economy, major sectors are experiencing declines and the dollar is declining which, when taken together, could send the markets south. Stay diversified.

As for bonds, the rally may have ended or stalled for corporate bonds as the spread between the yield for Treasuries (guaranteed principal and interest) has narrowed meaning there's less of a reason to take a risk on a corporate default because investors are not being paid enough extra to buy those bonds instead of Treasuries. Further, it appears that a new kind of corporate bond (called "constant proportion debt obligations or CPDO) which provided even greater yields by offering greater leverage through "credit default swaps" has started to run out of steam - sounds complicated (and it is) but suffice to say that the "new new" thing in the bond market has likely run as far as it can for now and any slowdown will impact all bonds.

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Real Estate Bubble? -
Residential construction fell last month to the lowest level in 15 years with the excess supply/declining price situation taking hold among almost every region in the country. Even Toll Brothers, the number one homebuilder in the U.S. is substantially cutting back on their building plans while waiting for the market to flatten from its current decline. "We continue to look for signs that a recovery is imminent but can't say that one is in sight,'' according to Toll Brothers CEO Robert Toll. "Nobody wants to buy something that they think will cost less two weeks or two months later.'' And yet, Bill Gates investment advisor has, according to reports, been taking advantage of the declines of homebuilders stock prices and buying substantial positions in them. As with the stock & bond markets (see above), the data is conflicting and requires informed decision making and nerves of steel.