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A New Year Begins

Here is for a healthy, happy and prosperous year.

2008 ended with equities rallying and government bonds selling off a little. 
On the bright side, corporate spreads have begun to narrow, the TED spread continues to slide lower, the ABCP schmozzle seems to have ended on a positive note and credit is flowing. I feel relatively safe in saying that credit markets are working again and that we will see continued improvement.
 Economies suck, however and unemployment will rise further. Even if Canadian unemployment reaches 8% that will only match the average of the past 60 years so this is not a disaster yet.
I continue to watch the US real estate market for any signs of bottoming and there are some tentative signs of that happening.
 In the meantime, government bonds are so extended that there must be a meaningful selloff waiting in the wings for whatever will trigger it.
 I just updated all the charts and they tell the same story of all time lows in yields in an extremely overbought condition.
 Also, I intend to return to Bay Street sometime soon so watch for that.
In the meantime, feel free to pick up a copy of my second edition!
Hank Cunningham

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