Weekly update: 10/26/2012

Markets seem at last to have noticed the possible range of consequences from the election 10 days hence, and the result is a wide-eyed, jaw-dropped, don't-do-anything. Absent constant paddling, stocks tend to sink, and that's what they've done between frozen days. Bonds tend to glaciate altogether. The 10-year T-note still cannot break 1.85% going upward, and its trading range since August has narrowed bottom-up: from all-time low 1.40% in July to 1.55% in September, now can’t fall below 1.70%. Mortgages are motionless just below 3.50%. Stocks also suffer from poor prospects for earnings. What a surprise. By some estimates nearly two-thirds of S&P500 earnings in the last half-dozen years have come from overseas, rising with global trade volume. As that volume now has flattened (at best), so have earnings. It is fair to say that the US is in better shape than elsewhere, but not enough so to propel earnings.