The relationship used to be summarized simply (too simply) as: bonds go down, and stocks go up. Now, it’s more like: bond investors freak out, and stock investors mosey along without a care. Equities poured it on today, with the Dow advancing 179 points, while the credit market continued to fret over concerns in the auction-rate markets, where short-term funding has become an issue and fund managers are scurrying away to Treasurys for liquidity. The two-year note’s yield closed at 1.897?owest since April 12, 2004. “There’s a fear of anything with a structure attached to it — any flavor other than plain vanilla isn’t selling and preferably plain vanilla backed by the U.S. Treasury is the best option,” says Len Blum, managing director at investment-banking firm Westwood Capital. What should be a generally calm market, where investors buy and sell paper easily, has fallen apart on a number of levels. After all, these are normally high-rated securities, but investors are questioning the ratings agencies. They’re backed by insurance from the monoline insurers, whose ability to stay afloat is a concern. And the investment banks who normally backstop these deals don’t want to at this point. “I expect this to continue,” says one analyst at a broker/dealer, who asked not to be named. Still, stocks still managed to pull off a nice day — with some surmising that there are those out there selling this short-term debt for stocks (they are liquid, after all). “Retail sales came out higher than expected this morning so I think that investors are hoping that means the recession is not as deep as anyone feared,” says Mr. Blum.

A pair of similarly named companies, both benefiting from increased demand for food and agricultural products, signaled that the times may be changing. Dean Foods fell 6.3?d Deere & Co. was down 1.1?ter both companies said the outlook has changed, expecting softness in coming quarters. Higher commodity prices are taking a chunk out of the bottom line for Dean Foods, while Deere & Co., which makes heavy equipment, particularly for agricultural applications, says economic softness will hurt in coming quarters. It’s telling that Dean Foods reacted first last year — shares were up 26? 2007 through April — but higher commodity prices started to worry investors, and the shares pulled back, eventually finishing the year off by 10.5?eanwhile, Deere was a powerhouse, gaining 93? 2007, but of late the concerns about economic activity have resulted in selling those shares. The stock was down 7.1? the year headed into today, and UBS analysts said today that expectations are “close to catching up with Deere.”

Lately, companies such as Wal-Mart Stores have noted anecdotally that consumers seem to be hoarding their cash, and they’re using gift cards, more often than not, on essentials rather than on items one might associate with gifts. With that in mind, analysts at Citigroup believe that tax rebates from the stimulus package, signed today by President Bush, will be similarly hoarded or used for low-margin goods, such as those sold at Wal-Mart. “The rebates could have a smaller impact on spending than expected as cash-strapped consumers opt to pay down bills or add to savings with the checks,” writes Deborah Weinswig, analyst at Citigroup. The brokerage found in a survey (they didn’t disclose how many people were queried) that 34?an on using the checks to pay off debt, and another 23?pect to add to savings.

Investors are forever asking when the current credit crisis will finally be over. But for some, the 1990s tech bubble isn’t over. The New York Stock Exchange’s regulatory arm Wednesday suspended trader Luis Miguel Cespedes for 10 years for trading malfeasance in the days before just before the end of the last bubble. According to the ruling, Mr. Cespedes, who worked for A.G. Edwards & Sons Inc., put over a dozen clients’ money into volatile technology securities and then piled on margin debt, and when the bubble burst, many of these investors were wiped out. The firm had already settled with 15 clients for $1.08 million total, and while his lawyer said “buyer’s remorse” was to blame, he added that he’d never seen so many complaints against one broker. So for those who wish to know when this will be over, target February 2017, when the last few malefactors are finally read the riot act. –with reporting from Andrew Edwards

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