“The U.S. could suffer another credit downgrade, similar to the Standard & Poor’s decision to strip the country of its coveted AAA rating in 2011, says Bill Gross, founder of Pimco, manager of the world’s largest bond fund.

The U.S. is running a structural deficit, a deficit a country would post even while running at full capacity, that is seriously jeopardizing the country’s health.  Until the government addresses massive liabilities, the country is headed for another downgrade.

Standard & Poor’s currently rates the country at AA, while Moody’s rates the country at AAA.

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“The Dow Jones Industrial Average hit 13,338 Tuesday, its highest since December, 2007. The S&P 500 added 16 points. Wall Street will remember May 1 as a great day.

But most of these gains are going to the richest 10 percent of Americans who own 90 percent of the shares traded on Wall Street. And the lion’s share of the gains are going to the wealthiest 1 percent.

Shares are up because corporate profits are up, and profits are up largely because companies have figured out how to do more with less.

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RATE, BRCM, CHK, CVS, GNW, HLF, OPEN, PEET, PLT, THOR, TRS, TRLG, WYNN

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Some commentary from The Reformed Broker on the recent action in REITs.

Read his great post with some charts, here.

Incredible piece of investigate journalism by John Koblin (@koblin) over at Deadspin.com. RUN, don’t walk to read it.

UPDATE: @sarahphilli has since been fired from ESPN.com as a freelance contributor.

READ STORY HERE 

Your tax dollars at work….

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“Natural gas prices plunged to a 10-year low beneath $2 per million Btus earlier this month, and investment gurus such as Jeremy Grantham of GMO say that makes the commodity a screaming buy.

“Everyone who has a brain should be thinking of how to make money on this in the longer term,” Jeremy Grantham writes in a report obtained in The New York Times….”

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“Fund manager John Hussman is as bearish as ever.

Although he admits that timing the market is difficult, he suggests, strongly, that now is one of the worst times in history to buy stocks:

We presently identify market conditions as being in the most negative 1% of historical data based on the average expected return/risk characteristics associated with similar conditions, on a wide range of horizons ranging from 2 weeks to 18 months.

One of these troubling “market conditions” is valuation. Stocks are still very expensive when measured against normal profit margins.”

More inflation would help to improve unemployment says Krugman….

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“Hedge fund manager Hugh Hendry expects there will be one more “washout” in the market that will create once in a generation buying opportunity for risk assets.

Hendry also believes the Chinese stock market is effectively a casino that only benefits insiders, and the rest of us have no reason to invest in it.

“This might be the year everyone else notices this; the year panic over Chinese economic growth comes to replace the market’s morbid fascination with the travails of the European continent and the year in which we see that the U.S. is not giving way to China in terms of global economic leadership,” Hendry wrote in a letter to clients that was published in part by the Business Insider.

“There is a near consensus that China will supplant America this decade,” says Hendry. “We do not believe this.”

“We are more bullish on U.S. growth than most,” Hendry says. “The momentous nature of recent advances in shale oil and gas extraction and America’s acceptance of the unpleasantness of debt and labor price restructuring looks to us as if it is creating yet another historic turning point.”

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APC, CE, EMR, HLF, SHLD, SFLY, FIRE, VECO

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Essentially T.S. is not impressed with earnings, worries over Europe, and says the first quaters rally was based on QE hopium…

“Late last year, Todd Schoenberger, managing principal of The BlackBay Group, a money management firm, predicted stocks would plummet 35 percent in 2012.

He’s not backing off that projection, despite the fact that the Standard & Poor’s 500 Index has rallied 11 percent year-to-date.”

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“The United States likely added only 125,000 net jobs in April, a Goldman Sachs report finds, far less than calls from Reuters for a gain of 170,000, and an average of 177,250 jobs created every month from December to March.

The Bureau of Labor Statistics will release the official number Friday, about a month after the March jobs report came in well below expectations with 120,000 jobs added.

“Real income growth remains soft, partly because of higher energy prices, wealth effects are not yet particularly positive, consumer confidence remains modest, and again some of the recent strength in retail sales probably reflects weather effects,” says Goldman Sachs chief U.S. economist Jan Hatzius, according to CNBC…”

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Earnings is looking great so far; here is a catch up on the view of the future from large international companies….

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“The global economy is mired in a “late Great Depression” despite central bank stimulus policies, says Yale economist and author Robert Shiller.

“Our whole economy has been affected by variations in confidence. Central banks are sort of trusted, but the actions they have often affect people’s confidence by appearance rather than substance. We’re not in the most trusting mood now,” Shiller tells CNBC.

The Federal Reserve, the European Central Bank, the Bank of Japan and the Bank of England have propped up their respective economies via liquidity injections known as quantitative easing, tools designed to spur recovery but dubbed by critics as printing money out of thin air.

He says the world is in a “new age of austerity.”

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