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Insights from Morningstar's Research Director at the Morningstar Conference this week

  • U-6 unemployment rate is key measure to follow (unemployed and underemployed).  Rate is currently 17%.  Employers more likely to to use temp workers to fills job needs as uncertainty lingers.

  • Deleveraging will take a while to work through
  • Demand for credit is weak
  • Net private credit creation has been weak for the past 5 quarters

  • Washington balance sheet is a mess
  • What's being discussed in Washington is not the problem and the problem is not being discussed!
  • Defense spending and entitlements represent over 75% of the Federal busget, yet nobody is discussing measure to deal with this

  • Valuation is not compelling in most markets.
  • 40% of S&P 500 earnings come from non-US sources (earnings growth does not necessarily mean improved economic situation at home)

  • Demographically, in 30 years China will look like Japan today with an aging population dependent upon a smaller productive work force
  • Population will get old before they get rich!

  • US long-term Treasuries = Return Free Risk!

Disclosure: No Positions