A Simple Explanation for Bond Yields

There are plenty of analysts and economists that
think QE2 is a bad idea. I’ve been one of them.

And even now, as economic data improves to the point
that GDP forecasts are moving higher, the Fed appears steadfast that the
economy needs more stimulus. The language in yesterday’s FOMC statement
was unchanged.

The inflationary risks of QE2 have been well
articulated by the anti-Fed crowd. And even though today’s CPI number
shows that inflation is not happening, it’s easy to interpret the rise in
bond yields as sign that inflation is right around the corner.

Obama’s Dividend Tax Relief

With President Obama extending the Bush-era tax cuts for at least two
more years, dividend investors can breathe a sigh of relief.

Taxes on dividends were slated to increase from today’s 15% rate up to as
high as 40% if the current tax rates were allowed to expire.

While some investors are waiting for the seal of approval from the United
States Congress to make the tax relief official, many dividend investors
are already taking advantage of the good news and are loading up on their
favorite dividend stocks.

Gold Breaks $1,400 on Jobs Numbers, China, and Europe

The strong gold bull market of 2010 resumed today with gold rising above

The spot price for gold was $1,413 as of 4:00 p.m. eastern time. Gold hit
all time highs in November then backed off as the dollar gained strength
primarily due to weakness in the euro. Today gold retraced back to over
$1,400 on labor department numbers showing anemic job creation and the
revelation of China’s gold import numbers.

The Labor department announced employers added only 39,000 jobs in
November, far below analyst expectations and the strong gains of 172,000 in
October. The overall unemployment number crept closer to 10% as it rose to
9.8% after months of holding at 9.6%.

Gold and other commodities priced in dollars have a tendency to rise in
value when the U.S. dollar falls relative to other currencies. Many
investors also consider it a

EU Bails Out Ireland; Pressure on U.S. Dollar Resumes

Ireland agreed to terms for a bailout over the weekend. And while the
U.S. dollar rallied today against the euro, investors should expect that
trend to reverse in the near future with the dollar continuing its long
term slide against major world currencies.

The European Union’s willingness to support indebted member nations is
bullish for the euro. Also, the Fed’s QE2 will continue to weigh on the
U.S. dollar.

Is This the Dip to Buy?

It’s Veteran’s Day, I’m taking a moment to recognize
the sacrifice and dedication of our military.

The bond markets are closed today, so we’re losing
an important catalyst for the stock market. Without the running gauge for
the U.S. dollar, traders will have to depend on recent news to drive the
action today. And that may not be a good thing…

Cisco (Nasdaq:CSCO) is down huge after its
earnings report last night. The company beat earnings by a couple
pennies, but offered guidance that was well below expectations.

What the End of the Bond Bull Market Means for Investors

It’s been a while since I read Bill Gross’ monthly
Investment Outlook.

If you don’t recall Bill Gross is one of the most
influential fund managers in the world. As the founder and CEO of PIMCO,
he oversees around $1 trillion in assets. Ad he personally runs the PIMCO
Total Return Fund, with assets above $500 billion.

Gross is a bond guy. And he’s done quite well over the
years, posting consistent annual returns in the 8%-10% range.

Bill Gross: Government Debt is a Ponzi Scheme

Today Bill Gross told reporters at CNBC that massive influxes of capital from
the Federal Reserve “is in fact inflationary, and, if truth be told, somewhat
of a Ponzi scheme.”

Over the past seven months, Mr. Gross has slowly dumped hundreds of millions
of dollars worth of U.S. Treasury bonds in preparation for what he believes
is the end of the bull run in bonds.