Knightian Uncertainty

Knightian uncertainty could describe, "risks that can't be measured, for example the likelihood that government borrowing will exceed even bloated estimates and that demand will be insufficient at prices that reflect future interest rate expectations". Of course revenue shortfall and the daily need to create new sources of income is what our elected officials think is their mandate.....and we the investors try to minimize our tax liability....a silly game that is incredibly unproductive....for all participants....

The Fed reports that delinquencies--loans that are 30 days or more behind in their payments stood at 6.29% of all residential loans outstanding up from the quarter before...and defaults are holding steady.....this is encouraging....assessors, brokers, lenders and lawyers we speak to say April was the best month year to date...activity has picked up. This is an important sign the rounding bottom is probably in place....the stock markets support for commercial REITs would suggest this as well.

The standard salary for a US lawmaker, both in the Senate and House is $174,000. As well as high salaries each member is allowed up to 60 full-time staff (depending on the size of the state).

During the first two months of this year the stocks with the best analyst ratings held up the best, but during the recent dramatic rally the worst analyst rated stocks are up the most......we are not surprised....the more a large broker dealer does not like a stock or industry the more attracted to the opportunity we become.....the street has been sanitized by the lawyers.....and has very little risk tolerance or creativity anymore. An example would be oil. Now approaching $60 dollar spot prices everyone likes oil....but they didn't @ $35.

The stock market up against it's 200 moving day average is going to take a long breather here......the only justification for any further move would be a realization at WDC, LLC that in fact... just like the private equity boys and hedge fund industry two years ago... when the access to leverage stopped the party stopped....the current and RISING deficits are not sustainable...the debt markets on the 30 year bond auction sold last week, fired a shot over their bow....the standoff has begun....buyer beware in the debt markets.

Gold looks great, so do the commodities. Delta the world's largest airline has hedged 75% of its fuel needs...up from less than a third a few months ago. Shortages for many key industries as they they restock/ adding to inventories and raising prices will be the story for the second half of 2009.

Danny Boy seen here looks for some sideways action for a while.....