Todd Harrison of Minyanvill.com talks to Yahoo!’s tech-ticker team about the five signals he sees as being those that fundamentally move the market.
1.Treasury yields: The 10-year yield settled at 3.50% on Friday, down from its recent rise to 3.78% on June 19, but still well above the January lows around 2.7%. Whether traders view this rise as a sign of “normalization” or incipient inflation will help determine the market’s fate, Harrison says.
2.Inflation vs. Deflation: Even Alan Greenspan knows the Fed faces a major challenge of needing to rein in excess liquidity before inflation takes hold, but not too soon as to risk choking off the recovery. Inflation is clearly a long-term threat, but Harrison says there’s 75% odds deflation persists for the near-term. (great piece on this by Morgan Stanley here)
3. New Supply of Stock: UBS’s $3.5 billion stock sale Friday is just the latest in a series of secondary offerings from banks. Some are worried about the pure supply and demand issues, but Harrison is …