Dangers Lurking on the Macro Front

Index	Close	Change
Dow	9266.51	-18.06
S&P 500	996.52	-2.16
Nasdaq Composite	1735.34	+4.64
Nasdaq 100	1280.53	+2.22
Russell 2000	473.83	+4.95
Semiconductor Index (SOX)	394.42	+3.96
Bank Index	900.05	-4.94
Amex Gold Bugs Index	166.48	-0.55
Dow Transports	2622.80	+7.01
Dow Utilities	235.75	-1.76
NYSE advance-decline	-243	-1256
Nikkei 225	9839.91	+191.90
10-year Treasury Bond	4.28%	+0.106

Laissez-Faire for Bull and Bear: Overnight, the world markets went wild on the back of Friday's big up session here. As our casino prepared to open for business, the futures were modestly higher, and that less-than-inspiring strength continued a couple hours into the day. Other than the SOX's lickety-split gain of 1.5%, I saw nothing else worth mentioning about the early action. That uneventful theme carried through all day, with a few minor lurches in both directions and only SOX stocks being chased. Had the market closed after two hours, it would have looked about the same as it did after the full session. In essence, nothing happened.

Away from stocks, the dollar was up 0.5% against the yen, flat vs. the euro, and up small vs. the Canadian dollar. Fixed income was under pressure once again, with the long bond down over a dollar all day, before closing down about 1 3/8 points. The precious metals were the scene of a good deal of activity. In the early going, silver was up about 15 cents to $5.22, before closing at $5.20, up 2% plus. Gold was up about $5 before closing up $2.10 at $364.90.

Dateline: Deficit City: Given as how we're mostly through earnings season, and there's not much to reprise on that front, I thought a review of the current macro environment might be worthwhile. Two stories on the front page of today's New York Times offer a less-than-pleasant look at where we are -- "Red Ink in States Beginning to Hurt Economic Recovery" and "New Rules Urged to Avert Looming Pension Crisis." As I have noted frequently, the widespread financial troubles that plague our state and local municipalities are a function of the bubble's aftermath, and the cleanup continues to be a serious problem. Similarly, our country's pension plans continue to deal with postbubble pain.