There are a couple of commentators I follow who accurately called the (at least interim) bottom last week... Gene Inger (who writes his own newsletter) and Jeffery Sout at Raymond James. On Monday, Sout reprinted his "Special Alert" from the previous week.

Consequently, the ‘call’ is that the lows are ‘in.’ How far the rally will carry is anyone’s guess since we never got the perfect crescendo downside-climax. But, ‘higher’ is our call from here and we would therefore be buyers on any weakness.”

Historically, he puts the October lows into context:

Further, we are entering the months of November/December, which we have learned the hard way is a tough time of the year to put things away on the downside. This is likely because of the festive nature of the Thanksgiving, Christmas, and year-end ebullient seasonality. Even after the October 1929 crash ‘they’ could not break the markets back down in the November/December timeframe!

If "they" couldn't break the '29 market in Nov/Dec, how are "they" going to break this one?

Bill Gross's latest missive is up at the PIMCO site... you can skip the first 30% of the article, unless you want to listen to another person give an unsolicited political opinion. However, the remainder of the article focuses on what we should be expecting from a Bernanke Fed, and how much longer the rate hikes will continue.

By the time 10-year and 2-year Treasuries reach parity, as is almost the case now, the economy is typically slowing and the Fed is at or near the end of its tightening cycle....

...The current upward cycle is now 27 months in duration and 230 basis points in magnitude, enough by historical standards to slow an economy or even produce a mild recession given increased leverage and the exogenous shock of energy prices. Typically an economic slowdown occurs 18 months after the beginning of an upward move in 5-year rates, and this cycle appears to be no exception with industrial production and service-related indicators having peaked nearly a year ago.

Bill goes on to predict a 2% or less GDP growth rate in 2006, with a good chance of an ease in Fed Funds by the end of the year.

There certainly are some economic headwinds out there, doing there best to hold things back. Let's see... higher oil prices, rising US trade and budget deficits, a Fed tightening cycle, and the ever-present specter of terrorism/geopolitical unrest just to name a few. Nevertheless, equity markets and risk premiums continue to sing "happy days are here again" no matter what the headlines read. How can this be happening?!?

...The answer is not an easy one. It largely revolves around the many years of excess liquidity creation in the U.S. economy — the repercussions of which have been felt across asset classes, and across global financial markets. Were long-dated interest rates in the U.S. in the 6%-8% band — as they were in the 1990s — it would be very hard to envisage an environment of booming credit and buoyant equity markets.

Put simply, despite a gradual policy reversal by the Fed since the middle of last year, the world remains awash with liquidity, and — as a result of this — remains largely anaesthetised against the many risks associated with investing.

It's the liquidity, stupid!