Watch Brad's interview on Bloomberg TV here, where he responds to the question, "Will the rally continue?"

I took down a tree over the weekend, using a handsaw, branch cutters, and a ladder. I had to do it piecemeal, one branch at a time, as it was right next to my house. That’s a lot of work, and I was sweating hard by the time I got down to the main trunk and had dragged the rest of the tree to the back yard. Yesterday, when I was cutting down the remains for disposal, the weather was a lot colder. A sweater, a fleece, and gloves weren’t keeping me warm. It was a big shift from one day to the next—but hey, I live in New England.

The change in the market weather hasn’t been nearly as quick, but it has been even more pronounced. Taking a look at the market over the past couple of months, it’s clear that the narrative has changed, which probably portends continued strong performance.

That headline should give you a hint about the contents of this post. Now that we’re well into earnings season, I thought I’d take a look at how we’re doing and what that might mean going forward.

First, a bit of context. Earnings estimates, being estimates, change over time—usually downward. Dr. Ed Yardeni, a terrific economist and market analyst, regularly presents charts like the one below on his blog. You can find the original here.)

The real news from yesterday is, of course, that the Boston Red Sox won the World Series at Fenway for the first time since 1918. Nothing else even comes close. End of post.

I’ve written before about the potential problems lurking in the financial system. LIBOR, for example, was something I started covering last year. Looking at the papers today, though, even I am surprised by the sheer number—not to mention magnitude—of the problems that are showing up.

In just one of today’s papers, the Wall Street Journal, we have the following articles:

• A1 – “SAC to Plead Guilty to Securities Fraud”
• C1 – “Rabobank Is Fined, CEO Is Out in Libor Settlement”
• C1 – “Troubles for J.P. Morgan in Its Effort to Settle”
• C3 – “Currency-Trading Probe Gains Momentum”
• C4 – “NASDAQ Glitch Prompts Trading Halt in Some Markets”
• C16 – “European Banks Trapped in Legal Limbo”

One of the stories in today’s Wall Street Journal describes how a number of U.S. cities are coming to terms with their inability to pay their obligations. Earlier articles in the WSJ and elsewhere gave some details—specifically, in years when investments did better than expected, many cities took the excess returns to add to payments, making the cookie jar smaller when the inevitable underperforming years came. They had confused the short term with the long term.

I get the same kind of question, in a different form, when I speak with investors. Should we invest in the stock market? Well, I say, what is your time frame? Over the long term, you absolutely have to invest in the market. Over the short term, you might be best off not doing so. Is this a one-time investment or a continuing stream of investments? How old are you? And so on.

This morning, I had the chance to talk with the lead fixed income (bond) portfolio manager from one of the largest Chinese mutual fund companies. Arranging the call was a bit difficult, what with the difference in time zones and our travel schedules (which is probably a metaphor for something or other), but the conversation turned out to be well worth the effort. As an aside, we really do live in a miraculous age, where you can talk to someone on the other side of the planet.

While rushing between planes yesterday, I had a good conversation with one of our advisors, who was preparing a talk for his clients about whether the recovery is real. Specifically, he was concerned about the fact that money velocity is so low.

I’m at the airport waiting to board a plane, so this will be a short post. Fortunately, today it writes itself. I mentioned last year how proud all of us here at Commonwealth’s research and asset management groups were to be named, again, to Financial Advisor and Private Wealth magazines’ list of investment research and wealth management all-stars. Last year, we had more winners than any other firm, for the second year in a row.

Well, we’ve done it again, and you can read the article here. Once again, we have the greatest number—and scope—of winners, and we’re the only major broker/dealer included.

Part of the problem with the government shutdown was that many of the economic reports we rely on were collateral damage. In the absence of data, everyone (including the Federal Reserve) has been flying blind. With the government back at work, the catch-up process has begun, and the September employment data was released this morning, giving us our first look at the effects of the (then looming) shutdown. A number of private data points have also been released since then, so I think it’s now possible to start to consider the economic damage.

The news on employment is not good. Total nonfarm payrolls were up by 148,000—much less than the expected 180,000 and well below the previous month’s figure of 193,000, which was adjusted up from 169,000. On the face of it, employment growth took a real hit here. While we can’t make too much of one month, the magnitude of the decline, combined with the fact that it took place before the shutdown, suggests that the actual shutdown damage will be worse. Both the unemployment rate and underemployment rate did drop slightly, from 7.3 percent to 7.2 percent and 13.7 percent to 13.6 percent, respectively, but even that news isn’t particularly positive, as the drops weren’t driven by job gains but by changes in the workforce.