Fear's Here, Dear.
The S&P 500 went the last inch toward losing all of its gains for 2006 today. Core inflation is spooking the Fed, and the Fed members are spooking investors. With the Producer Price Index coming out tomorrow morning, and the Consumer Price Index hitting on Wednesday, a lot of traders seem to be running for the exits.
Large-cap U.S. stocks are trading below 15 times 2006 operating earnings. This is the cheapest stocks have been in years. Meanwhile, US bonds are still looking pricey. It may be about time for that portfolio rebalancing act.