* First of all, Gov. Scott Walker of Wisconsin is soaring on Intrade.
I don't know what's going on up there, but the Republican's chances of surviving the recall election on June 5 are now at 75 percent, a new high.
(The polls show the embattled governor in a dead heat with Milwaukee mayor Tom Barrett, but state Democrats are frustrated that the national party hasn't committed the kind of money they feel they need -- a red flag.)
* According to a new New York Times poll, Mitt Romney is ahead of President Obama, 46 to 43 percent (within the poll's margin of error).
Pay no attention to same-sex marriage, or Romney's career at Bain Capital, or ... anything else. It's the economy, stupid. Or, more accurately, how people feel about the economy. And the economy feels ... lousy.
It doesn't matter what the latest GDP, unemployment or housing numbers show. What matters is: How's my job? How's my company doing? Are sales up? Any chance of a bonus this year? When will my brother, daughter, or buddy get a job? Why can't my neighbor sell his house? Are things getting better, or worse?
* The bond market is in a historic bubble. An editorial in the Times today confirms it (my emphasis):
Since the start of 2008, domestic stock mutual funds, a common way for individuals to invest, were drained of more than $400 billion, compared with an inflow of $52 billion in the four years before that.
These investors have increasingly opted for bonds over stocks, with reason.
Conventional wisdom has it that bubbles, by definition, take investors by surprise. And I disagree; I maintain that people generally know when there's a speculative bubble. The problem is timing.
Take the four main bubbles in my adult life: precious metals in the late 1970s, stocks in the mid-'80s, dot-coms in the '90s and real estate in the aughts. In each one, I remember people marveling at the prices and wondering, out loud, when the bubble would burst.
The trouble with bubbles, though, is not that they are hard to spot, but that they always last longer than everyone thinks. Therefore, anyone trying to sell short gets run over, and bubbles only burst when everyone gives up on selling. Then, the markets decline so fast that no one can react.
Come on: the 10-year note is yielding less than two percent? The 30-year bond is under three percent? Don't get caught long.
* Finally, Joe Nocera makes a good observation in his column this morning (my emphasis):
We also know that Ina Drew, a JPMorgan veteran who headed the chief investment office — and who departed on Monday — made $14 million last year. Wall Street executives who make $14 million are not risk managers. They are risk takers — big ones. And genuine hedging activity does not cost financial institutions billions of dollars in losses: their sole purpose is to protect against big losses. What causes giant losses are giant, unhedged bets, something we also learned in the fall of 2008.
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