Mid-day update

Random notes for your trading day:

• Jane Caron, chief economic strategist at Dwight Asset Management, regards the rally that caused Treasury yields to plunge as unsustainable. The 10-year Treasury bond fell as far as 4.559% on Oct. 4 before pulling back -- it was lately at 4.75%. She says this is the result of unrealistic expectations for rate decreases from the Fed. "If inflation emerges as a Fed concern however -- and we believe that it very well may -- the ability of the Treasury market to sustain current prices is wishful thinking," she writes.
• Jim Bianco of Bianco Research continues to hammer former Fed head Alan Greenspan for his comments as a private citizen. According to the Financial Times, Mr. Greenspan told a private audience that the most recent boom didn't come from a 1% federal-funds rate "or from the Fed's easing. It came from the collapse of the Berlin Wall." Mr. Bianco replies, somewhat apoplectic, "Only Greenspan can say this with a straight face. In his mind, Fed policy can never do any harm, especially his Fed policy. Maybe he should quit offering his opinion at $150,000/hour before he ruins his reputation as the greatest central banker of the 20th century."
• Heating bills should decline this winter for people using natural gas, but not for those using fuel oil, the Energy Department says. Families using natural gas should expect to pay an average of $119 less during the upcoming winter compared to last year, a 13% decrease. Those heating their homes with fuel oil will pay $91 more, an increase of 6%.
• October's a nice month for birthdays, particularly for the bull markets. The U.S. bull and global bull markets are both celebrating four-year anniversaries this month, and research shows that in previous instances where a bull managed to last four years, the fifth year was generally a pretty solid one as well.
  There have been six instances since the end of World War II where a bull lasted four years (including this one), with the average gain of 81.4% for the first four years of the bull, according to Birinyi Associates. The fifth year has been no less fruitful -- on average, the market gains 14.4% in that year -- and in only one of the previous five periods did the bull end in that fifth year, during the bull market that lasted from October 1957 to December 1961. So far, the S&P 500 is up 74.2% in this bull, making it the fourth-best (but just barely behind the 1949-1956 and 1957-1961 bulls). The best bull through the first four years was the August 1982 to August 1987 bull, which had gained 135% through the first four years, and held on for one more year before starting to sag -- ultimately crashing in October 1987.
  Meanwhile, Merrill Lynch points out that Oct. 10, 2002, marked a secular low for emerging-markets equities and since then, annualized returns have been 35% and the market capitalization of the Morgan Stanley Capital International's emerging-markets index has increased from $454 billion to more than $2 trillion. "It's still a bull market," writes Michael Hartnett of Merrill. "The bull market was born at a time of deflation, fear and cheap stocks. It will die at a time of inflation, greed and expensive stocks. That's a few years away in our view."