From Bill's Corner...

The economy is still sluggish. Layoffs are still increasing. Very few companies are hiring. With the uncertainty in the marketplace, it is easier for an employer to pay overtime to existing jobholders vs. taking on new employee and benefits. Retail and industrial are not at full capacity, and there is little incentive to expand the workforce. The poor job outlook is discouraging the employed from buying cars, homes, and other goods. This hesitance to spend may increase further corporate cutbacks and additional layoffs. It is not a pretty picture.

The Federal Reserve is giving clear signal that the picture is not rosy. Since interest rates are already low, the Fed has resorted to "quantitative easing". It is one of the few tools they have left. In my opinion, quantitative easing is another way to print money and flood the money supply, which will ultimately stimulate the economy. The Fed does not create jobs, corporations do. And as long as the economy is stuck in low gear, companies will not be keen on hiring. It will take some time for the quantitative easing to take effect.

Earnings for the recently ended third quarter will start to roll in soon. Forecasts have been fairly good, and we expect this trend to continue during this earnings season.

This year the market has been a roller coaster. The market was down for the first half of the year, but has since recovered. The fears of a double-dip recession seem to be receding. However, we are still not out of the woods yet.

It is time to exercise caution.