potential debt ceiling deal

The potential deal looks like 4 trillion dollar cuts in 10 years, which means average 400 billion out of the economy every year (2-3% of GDP). Of course, the debt deal may bring some certainty to the market and induce some corporate investments (one trillion? at most). It definitely will slow GDP by at least 1% a year. I do not see the positive for stock market.

Apple

The earning and cash flow is incredible at Apple and given its growth rate, the stock is very reasonable priced. Most analysts have a 450 or higher price target on APPL. The only thing I will be cautious is new product line. Over last five years, APPL has brought two new products (Iphone and Ipad) to the market and generate 100% growth every year. If Apple does not have new blockbuster product come on line, the growth will slow and competition will intensify.

The worst option

Benarke testified that the Fed is ready for extra stimulus. This is the worst possible option. The mere mention of possible QE3 has get market excited but it also pushed the oil up by 2 dollars and Gold another 20 dollars. The speculation in raw materia will push them mush higher and the inflation will not moderate as expected by the Fed. That's enough to get the Fed out of any further stimulus. So it will be high inflation and no QE3 at the end.

europe debt problem and QE3?

The Europe debt problem is getting worse but the market is rallying on the hint that Fed may start QE3. My take is that QE3 is not going to happen. The cost is too high. The market reacts to push oil up 2 dollars and gold 20 dollars. The inflation will outweigh all the benefits QE3 may bring. Buy protection when it is cheap