We all know that 2008 has been a rough year for virtually all investors, and the municipal market has not been immune. Municipals, however, have weathered the storm better than most asset classes.

Over the long term, municipals have “provided strong taxable-equivalent returns with lower volatility relative to their taxable counterparts,” according to Barclays Capital. The chart below shows the relative risk and after-tax performance of major equity and fixed income asset classes.

We’ve been talking infrastructure for a long time, and more people are now listening after President-elect Obama revealed that his best idea for stimulating the U.S. economy is through a massive infrastructure spending program.

While details are still being worked out, it appears that Mr. Obama will quickly propose a two-year fiscal stimulus package worth up to $800 billion and that much of this amount would be directed toward infrastructure programs. To put this number in perspective, $800 billion is equivalent to about 5.5 percent of the nation’s GDP.

To get some perspective on the current market conditions, it may be helpful to look at what some bear markets of the past have looked like.

Below is a chart that goes back to 1940; as you can see,  what we’ve recently gone through was the second-worst five-day period of time over the last 68 years. It was essentially a market crash. The only other thing that's really even close was the crash of 1987. 

Recent months have resurrected a potent economic villain of the past—stagflation.

The U.S. economy is seeing little to no growth, while at the same time inflation has risen to levels not seen in the better part of two decades due in large part to soaring food and energy prices.

U.S. Global Investors (Nasdaq: GROW) recently hosted a webcast titled “Energy and Commodities Trends: Speculative or Sustainable?” to provide a closer look at the current strength in natural resources prices. Our timing for this topic was good: oil prices hit a record $135 a barrel last week and drivers get more and more depressed every time they pull up to the gas pump.

Americans want to know how long we are going to have to put up with this. The answer to that question depends on whether one places most of the blame for today’s prices on market speculators or on a fundamental shift in global supply and demand trends.