* We are in a cyclical bull market within a secular bear market. The secular bear market began in 2000 and, like secular bear markets before this one (1929-1949; 1966-1982), this one could last for 15 years or so. Even after secular bear markets have put in price lows (1932, 1974), we've typically seen years of weakness and bottoming action until stocks become an unloved asset class. The March, 2009 may have been a price low for stocks, but we've got a way to go before stocks are a shunned investment.
* All that being said, we *are* in a cyclical bull market and only recently have we begun to see the kind of bullish sentiment extremes that might accompany a topping process. This bull market has lasted a little more than a year. Most bull markets last longer than that. I'm not convinced we'll roll over until there are stronger hints of a move away from low interest rates. The inability of traders and investors to recognize the difference between cyclical market moves and secular ones has created much pain for bulls and bears alike.
* I find it hard to believe that the Fed will have the political cover to raise interest rates until we see hard signs of inflation. That means that commodities might have to rally hard before we see the bull market in stocks roll over. If we're not overheating, I'm can't imagine the Fed raising rates in a high unemployment environment. So we stick with monetary ease until we overheat.
* A rise in long Treasury rates (decline in bond prices) will be a good tell for inflationary expectations and anticipation of overheating. As long as rates stay tame, it's hard for me to imagine stocks going to hell.
* I'm open to the possibility that all the above might be wrong and that the next driver of stock prices will be monetary tightening and a hard landing among emerging market economies. If the emerging nations stop serving as the engine of global economic growth, that's when we could see a second economic slowdown. I'm not convinced that the China miracle won't end up looking like the Japan miracle.
* I don't know how we emerge from burdensome debt other than to transition from being a consumption-driven economy to being an export-driven one. Over the long haul, growth-by-export will support a weak U.S. dollar, though any near term economic slowdown led by emerging markets would likely see a flight to the dollar.
* It is hard for me to imagine a transition away from a consumer-driven economy without deflationary pressures coming from household deleveraging, weakness in commercial real estate, and pressure on local/state governments and local/regional financial institutions. The panicky flight to high yield debt (junk bonds, muni debt) could end badly if we get a second bout of deflation.
* If I have to bet on the future, I'll bet on countries with favorable demographics, favorable balance sheets, favorable rates of taxation, and freer markets. Free markets are messy and far from perfect, but they are ultimately self-correcting; centralized ones are not.