In investing, the return you want should depend on whether you want to eat well or sleep well — J. Kenfield Moreley

1. Fed hints at QE 2.0 — The Fed reiterated its commitment to near-zero interest rates yesterday, as expected, but opened the door to the possibility of more QE in the near future.
2. BOJ official hints at further easing — Bank of Japan policy board member Ryuzo Miyao suggested today that the BOJ will continue to loosen its purse strings, saying the central bank would take “timely and appropriate” action if downside risks to the Japanese economy materialize.
3. S&P500 Overbought — interesting chart from the Bespoke Investment Group depicting the S&P500 50-DMA spread measured in standard deviations. The chart shows the S&P500 is currently trading at an overbought levels similar to where it was in late April and early August.

4. Bullish Sentiment Highest Since Early August — According to the Investors Intelligence weekly sentiment survey, bullish sentiment (41.4%) among advisors is currently at its highest level since early August.

5. According to the Dow Theory — primary trend of market is UP — Currently, the DOW is at 10,739 and the high for the Transport 4,540; Both indexes are up from their respective Aug 9th closing high of DOW 10,698.75 and Transport at 4,516.35.
6. Durable Goods — gains in machinery, computers and fabricated-metal products, as well as an upward revision to July’s durable-goods data. Also, a barometer of capital spending by businesses rose; orders for non-defense capital goods, excluding aircraft, increased by 4.1%.
7. Gold — Gold futures climbed above $1,300 an ounce; New high for the year.
8. David Tepper — HedgeFund Biggie Video on CNBC.

The week ahead — Economic data:

The average man desires to be told specifically which particular stock to buy or sell. He wants to get something for nothing. He does not wish to work — William LeFevre

1. Basel III — Regulators who met in Basel agreed to raise the level of banks’ common equity to at least 7% of assets, up from 2%. But the rules give banks time to bulk up: The capital requirements won’t take full effect until Jan. 1, 2019.
2. China’s Economy Resumes Acceleration — Industrial production, a major gauge of overall activity in China’s manufacturing-driven economy, was up 13.9% from a year earlier in August, accelerating from 13.4% growth in July.
3. Japanese PM Naoto Kan re-elected president of the Democratic Party of Japan — Yen surged to highest level in 3-month; Mr. Kan defeated veteran power broker Ichiro Ozawa by a wide margin.
4. Yen plummets on Japanese intervention — The yen tumbled from a 15-year high against the dollar after Japanese monetary authorities intervened in international currency markets for the first time since 2004.

The week ahead — Economic data from Econoday.com:

Financial markets will find and exploit hidden flaws, particularly in untested new innovations — and do so at a time that will inflict the most damage to the most people — Raymond F. DeVoe

The major indices settled with modest gains following a holiday-shortened week of light corporate news and economic reports.

1. Trade Deficit — the Commerce Department reported the nation’s trade deficit narrowed as imports fell and exports climbed to near two-year highs.
2. The Bank of England announced no change in interest rate — holding its key lending rate at a record low 0.5% and maintaining its bond-buying program at 200 billion pounds ($309 billion).
3. China’s August imports were up 35.2% year-on-year to $119.27 billion, against a 25% increase expected by economists surveyed by Dow Jones Newswires. Exports climbed 34.4% to $139.3 billion, against an expected 35% increase.
4. H-P Bribe Probe Widens — U.S. Investigators Are Looking at Multiple Transactions, some outside Russia; Hewlett-Packard Co. disclosed Thursday that a probe by the U.S. Department of Justice and the Securities and Exchange Commission of possible bribes the company paid in Russia is now wider than previously reported.

The week ahead — Economic data:

Stock prices tend to discount what has been unanimously reported by the mass media — L. Ehrenkrantz

1. IMF rolls out precautionary credit line — the goal is to provide these countries with financial help before they reach a crisis point. The IMF is creating a new credit line that is expected to serve as a precautionary “insurance policy” for developing countries with sound fundamentals that may not meet the more stringent requirements of the IMF’s 2009 flexible credit line.
2. India’s economy rockets ahead — India’s economy expanded at the fastest pace in over two years, growing 8.8% in Q2 from a year earlier.
3. Factories’ Strength In U.S. And China Reassures Investors — U.S. manufacturing growth unexpectedly accelerated in August and the jobs gauge hit a 26-year high, an industry report said Wednesday, complementing bullish data from Asia that bode well for the global economic recovery.

4. Retail Sales — Retailers rang up solid August sales Thursday, beating views for the first time since March as deep discounts spurred shoppers to step up back-to-school buying.
5. Rare glimpse into China’s forex reserves — A report in the China Securities Journal, an official newspaper, cited unnamed reserve managers who said the holdings are the largest stockpile in the world at $2.45T, roughly in line with global averages. 65% allocated to dollars, 26% to euros, 5% to pounds and 3% to yen.
6. Russia Wheat ban extended, fears of a global food crisis — Russian Prime Minister Putin extended his country’s grain-export ban through at least Nov. 2011, after announcing last month that Russia would suspend grain exports until the end of this year.
7. Gov’t Income Supports Surging — A record 30 cents of every dollar in personal income comes directly from government, Commerce Department data show.

Economic Calendar for next week:
1. 9/8 — Beige Book and July Consumer Installment Credit;
2. 9/9 — trade deficit;
3. 9/10 — July wholesale;

Embedded is an interesting Video from WealthTrack — Bruce Berkowitz, portfolio manager of the Fairholme Fund (best Domestic Stock Fund Manager of the Year in 2009)