The whole trading world is aflame with that we’ll-go-higher-maybe-unless-we-don’t question mark.  Feels like an inflection point, but that’s what the last two weeks felt like, too, to little sustained result. Should be an interesting week.

For investing and diversification updates, I (always) recommend spending a few weekend minutes getting Random Roger’s Big Picture (~9 mins)

For a couple tech thoughts on the inflection point question:

And finally, in the news-you-can’t-use (to trade anyway) category:

That last has to be one of the grimmest statistical outlooks I’ve read yet (and I eat grim three square meals a day these days). A nibble for you:

According to RealtyTrac, job losses result in a home foreclosure 10% to 15% of the time. If job losses narrow from the monthly average of 670,000 in the first quarter to 325,000, almost 3 million more jobs will be lost before year end. That will translate into another 300,000-450,000 foreclosures, and an unemployment rate of almost 11%. But what if that estimate of job losses is too optimistic?

New research by the Federal Reserve and Boston University of credit spreads of 900 non-financial companies from 1990-2008 predicted changes in the economy ‘phenomenally’ well. Based on their initial research on low to medium risk corporate bonds with more than 15 years to maturity, the researchers went back to 1973 and found the analysis still worked well. With the massive widening of corporate bond spreads last fall, the researcher’s model predicts the economy will lose another 7.8 million jobs by the end of 2009, and industrial production will fall another 17%. In the spirit of optimism, let’s assume this ‘phenomenal’ model is off by 35%, due to the extreme nature of this credit crisis. That still results in another 5.1 million lost jobs, and an 11% drop in industrial production. In that scenario, the unemployment rate climbs to near 12.5%, the underemployment rate breaches 20%, and another 500,000-750,000 foreclosures result.

It’s also full of simple little reminders with massive implications like this one:

Falling home prices led us into this crisis, and home prices are still falling.

Green shoots, indeed. A definite must-read, but you might want to knock back a scotch or eight and strap on a feedbag of Xanax first. (Interestingly, he expects a pullback to 760 or so in the S&P, but a continued rally over the next 3 months or so.)

Be careful out there, and have a good week.

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