On the interest rate front, the 10-Year Treasury sold off, and is now at 4.7% after yielding 4.6% a week ago. The reason for the sell-off in bonds was somewhat of a mystery. Last week's employment report showed a dramatic slowdown, and no one really knows for sure whether the US economy will have a soft landing or a hard landing.

In addition, and what everyone has basically put on the back burner, is the inverted yield curve. I am beginning to wonder if the stock market rally has any relation to our "magic theory" about oil prices. At this point, I would not rule anything out.

If the inverted yield curve does not eventually end in recession, or at least a downturn in the economy and the stock market, it will buck any historical behavior we have witnessed in the past.

One factor edging the economy toward a hard landing is the real estate market. Now some will try to get you to believe that the real estate bubble is localized meaning that the area's that are being hit the hardest are places like Florida, Arizona, Las Vegas, etc...

This is true to an extent. Yes, these are the AREA'S that will be hardest hit, but the PEOPLE hardest hit are all over the nation. For example, who do you think were the buyers of this property in the "bubble" areas? Please don't tell me the only buyers were people from Florida, Arizona, and Las Vegas. The speculators in these bubble area's came from all over the nation. That's right! Northerners, wanting to get away from the cold, were among the largest groups buying and speculating on property in Florida and Arizona.

Earnings for the S&P in the 4th quarter are expected to come in around 14%. However, we cannot ignore the fact that softer economic times are ahead, and the stock market has yet to discount future results.

If energy prices remain at lower levels after the November mid-term elections, consumers will have more money to spend, but $2.00/ gallon gasoline is still not cheap. What no one is talking about is the possibility of energy prices rising after the election.

Even if energy prices remain where they are, we need to keep in mind that OPEC stands ready to cut production, housing prices are falling and consumers cannot pull additional equity out of their homes to fuel their spending habits, we have a negative savings rate, and jobs are being cut. I don't know what all of this means, but it doesn't sound very good.

On the financial channels last week I heard a commentator say that insiders were buying. NO THEY ARE NOT. What this person was referring too was corporate stock buybacks. While corporations may be buying back stock, purchases by company insiders are virtually non-existent.

As far as inflation is concerned, yes, energy prices are a little lower. But, the local businesses that we buy from on a daily basis raised prices because of higher fuel costs, but have not lowered prices to adjust for the decline in energy prices.

Now that energy prices have fallen, a sandwich at Firehouse subs is still 20-25% higher, restaurants have not adjusted their prices downward, and either have plumbers, electricians, or builders.

So, yes, energy prices are down, but goods, services, rents, fees, and taxes are still up.