Grab-bag of Thoughts

(1) The biggest bright spot of the economy continues to be corporate profitability; however this continues to largely be on the backs of further spending cuts, increased productivity and increased hourly shifts for existing employees. These produce earnings profits but neither revenue growth nor a contribution to general economic prosperity. Nonetheless, should corporations start spending the hoards of cash on their balance sheets (which I'm not necessarily advocating for or against mind you), that would have a ripple effect in the economy while also making them more vulnerable to any 2nd half 2010 slowdown.

(2) Moody's came out with a negative outlook for a number of banks over the next 12ish months -- Citi, BofA, and the like. Housing guru Robert Shiller stated that he believed a double dip was a 50%+ chance. Not sure if he was talking housing or general economy. Probably general economy since housing is already in a double dip. Meanwhile, famed and outspoken investor Jim Rogers acknowledged that European stress tests were a PR ploy and that another recession would hit the US circa 2012 simply due to the historical average of years between recession for the US. This time however, policy responses will be limited as the Fed is out of bullets to combat slow growth.

(3) 2nd quarter GDP may come in closer to 2.7 or 2.8 tomorrow due to what appears to be a late inventory boost as the inventory restocking cycle winds down. This will rob from 3rd quarter GDP. Also, given the slow nature of revising GDP numbers, what will ultimately become a 2.2% GDP number for the quarter is likely to start out with an initially higher estimate around 2.7 or so.

(4) The 200 day moving average may give way today or tomorrow and allow markets higher, but its resistance really has been quite spectacular. The question then becomes, is an eclipse of this mark on the S&P valid if based on low volume. Keep an eye on the VIX's 23.38 level as well.

(5) A number of base companies (FedEx and the like) are reporting better than expected earnings for 2010 2nd half. This speaks of no-slowdown. The battle is brewing and the fight for the year is shaping up to be quite an entertaining one.