That's the news

Feeling Good on Jobs: March Consumer Sentiment Rises

"Consumers have discounted the administration's warning that economic catastrophe would follow the reductions in federal spending, and consumers have renewed their expectation that gains in employment will accelerate through the rest of 2013."

And that expectation could very well lead to acceleration in employment gains.  But then eventually, inevitably, when people realize that there's no real reason for all the gains, that there's no real reason to be so optimistic, there will be panic in the streets.

Consumer Spending in U.S. Climbs by Most in Five Months

Household purchases, which account for about 70 percent of the economy, gained 0.7 percent after a 0.4 percent advance the prior month that was bigger than previously estimated, a Commerce Department report showed today in Washington. The median estimate in a Bloomberg survey of 78 economists called for a 0.6 percent rise. Incomes increased 1.1 percent, more than projected, sending the saving rate up from a five-year low.

Gee, it's getting a little tiresome here with initial estimates being revised up all the time.  It seems like not that long ago, the data was saying that incomes were down and spending was up.  So, perhaps there is more to the previous consumer sentiment story.

Bob Doll: Why I Expect Gold to Disappoint

On stocks, Doll said "it is unbelievable how long this has gone on without a pullback. We're going to correct at some point, but the point is that the economy is getting better, the Fed is in our court, earnings are going to be OK, the stock market is going to go higher."

So, it's beginning to feel like everyone is a bull, and there doesn't seem to be any reason to not be one.  Which could, in itself, be a reason to not be bullish.  But, this time it's different.  This time, we have the Fed on our side.  This time, we have the bigger fool telling us that they'll buy whatever we're selling for pretty much the next couple of years.  Might as well hang on a while longer.

That's the news

Junk Bond Issuance at Record High

Heavy inflows into funds purchasing these securities has led to a considerable narrowing in the spread between the yield on junk bonds and U.S. Treasurys over the past year. The yield on the benchmark 10-year Treasury note stands at 1.83 percent.

What could go wrong?  One thing you have to admit here is that Ben is getting all kinds of people invested in all kinds of things that they never would have invested in before.  Broadening their horizons.  And junk bond issuance being at a record high just goes to show that someone will be more than happy to take your money.

Jobless claims rise, but GDP data shows more growth

While jobless claims increased more than expected last week, they have trended lower this year and remain near five-year lows. Last week, initial claims for state unemployment benefits increased 16,000 to a seasonally adjusted 357,000, the Labor Department said.

I understand the idea of seasonal adjustment; it makes some readings more comparable to others.  But it feels a lot like they're saying that some unemployment claims don't count.  At any rate, this should be good news for markets because it means the Fed is even more likely to continue with QE.  Yay!

Economy expanded at 0.4 percent rate at end of 2012, latest sign of meager recovery

The U.S. economy is teetering further on the edge of recession, with revised numbers showing economic growth clocking in at an anemic rate at the end of 2012.

What a difference your news source makes in what is actually the news.  Reuters, in the previously linked post about jobless claims and GDP data, spent a lot of time quoting people as saying things are looking better.  Then, Fox comes along and says we're "teetering further on the edge of recession."  But the Fox article talks more about how people feel about the recovery, and the really important thing for this recovery is how people feel about it.  So, despite improving numbers on the economic front, we still aren't out of the dark.  Well, unless you're invested in stocks or real estate.  At least for the time being.

That's the news

Don't Get Snookered by Rising Home Prices, Shiller Warns

The interesting thing about listening to interviews like this is that the news people tend to want to hear something that nobody wants to say.  So, we hear stuff like "it might be a recovery" and "it might be a bubble."  But, I did learn one thing from this interview.  I don't know why it never occurred to me before.  It's not actually a recovery until asset prices (in this case home prices) get back to the peak level.  In my opinion, that's just a stupid way of looking at it.  Home prices shouldn't have gotten that high, but they did, so now we want to know how long it will take to get back that high.  Well, I think the important thing to take away from this interview and remember when you're looking at stocks, or real estate, or any market is this:

"One thing that makes it very hard to forecast home prices right now is that we're living in a totally artificial real estate economy," said Shiller, co-creator of the Standard & Poor's/Case-Shiller Index, a widely followed measure of housing prices

It's artificial.  It's being manipulated.  Don't expect it to behave in a "normal" way.

Fed’s Unintended Consequences Are Hitting Everyday Life: Kenny 

While monthly headline inflation data continues to come in below the Fed's 2% target, Kenny and many other market watchers see it showing up elsewhere "in everything we assume is a part of our daily life."

I would argue that inflation is showing up in all kinds of places, from the real estate market to the stock market.  And while it is showing up in food and gas prices, it really isn't showing up much in other consumer prices, and consumer prices are what we talk about when we talk about inflation in a normally functioning economy.  Again, we don't have that.  It's artificial.  It's being manipulated.  Don't expect it to behave in a "normal" way.

Fed-Speak Freakout Shows Traders Aren’t Really Paying Attention

As markets sit near all-time highs, perhaps investors are looking for and are waiting for any reason to hit the sell button, Task notes.

And rightly so.  Unfortunately, there are all kinds of unintended consequences of QE going on, and anyone that thinks they know all about those is going to get blind-sided.  So, I think we can expect increasing intraday volatility, but at the end of the day, I don't see any major moves happening in either direction.  Just the gradual grind up for the most part.

That's the news

Wall Street gains on economy, S&P 500 record still eludes

The data "supports the thesis that housing is indeed recovering, which is sensational news for the household balance sheet," said Todd Schoenberger, managing partner at LandColt Capital in New York. Equity markets "should continue to elevate for the foreseeable future."

Not to nitpick or anything, but I wonder how long it will take before people stop looking at the housing recovery as being a thesis.  Probably until the next crash, which shouldn't be too long given the rate at which housing is recovering.  Actually, any decline in housing prices will be used as "evidence" that housing isn't recovering.  Well, okay.  I don't really see this as a "recovery" either, but for different reasons.  I see it as more of a reinflation of the bubble.  I guess it really depends on your definition of recovery, but most people seem to think that home prices rising equates with recovery, and if this were a normal market, that's what I would think too.  This is not a normal market, though, home prices were supported by the Fed and federal government at a level that was above the historic trend.  But expectations of the general public can be changed, and the longer home prices remain high on a historical basis, the longer people will will have to adjust to the new normal.

The second part of the above quote, that equity markets should continue to elevate for the foreseeable future is not particularly earth-shattering either.  First, given that equity markets over the long term have always trended up makes that statement the most likely outcome.  Equities tend to rise.  But again, while the housing news is certainly a reason to think that equities might do better in the near term, there are more compelling reasons to think equities will rise.  Mostly due to the Fed's quantitative easing.  There just isn't anywhere to put money and expect a return that will even keep up with inflation, unless you've been following my advice and stocking your basement with whiskey.

Wealth Inequality Getting the Fed's Attention

What's more, there is still widespread disagreement among academics and economists on the exact causes of inequality. Is it globalization or tax policy or the decline of labor unions or CEO pay or Wall Street or "winner-take-all" markets? Or some combination of all?

 For what it's worth, I say it's a combination of all of the above, with the exception of the decline of labor unions.  Who needs labor unions when the federal government is busy being the ultimate labor union?  What could be better for labor than the government mandating wages and benefits?  I think that it is the federal government that has brought on the decline of labor unions.  Probably unintentional, but that's what is happening.

Payroll Tax Hike: The Doomsday That Wasn't

"Hours increased and employment increased, so more people had more money in their income even if taxes were higher," Curtin said.

I have to admit, I expected more of an economic hit from the payroll taxes.  I didn't expect the increased hours and employment.  Then again, it's still early.  And apparently, according to the article, there are a lot of people who either don't know how much they make and so didn't notice any change, or they don't know how to figure 2%.  But in the end, 2% of and average paycheck is just a few bucks a week, so on an individual basis, it probably is hardly noticeable.  On a macro scale, the picture could be quite a bit different.  I guess we'll just have to wait and see.

That's the news

Wall Street falls after Cyprus deal called model solution

The Dutch finance minister said if banks needed restructuring and were unable, then euro zone officials would turn to shareholders, bondholders and uninsured depositors to contribute to a bank rescue.

It seems to me that depositors shouldn't be held accountable for a bank's failure, even if they are uninsured.  But then again, it just goes to show that it's a good idea for depositors to keep track of just how much they can deposit and be insured for.  The banking system is dependent on depositor confidence.  Shareholders and bondholders should be aware of the risk they're taking on.  Those investors should bear the cost of restructuring.  Unfortunately, this "model solution" may lead to some withdrawals, which may cause further problems for other banks.  I don't really know, and I don't know if anyone knows.  What I do know is that my bank doesn't pay enough interest for me to take on any kind of risk, but as I watch the developments around the world, I feel like the little I have is becoming increasingly at risk.

This Housing Recovery Is Different: Investors Are Now Big Buyers

What happens when these investment firms leave the market?

“That’s a huge risk," says The Daily Ticker’s Aaron Task. “If they decide…they don’t really want to be in this business all of a sudden you could have a ton of new homes coming back into the market and then that supply situation will get flipped very badly against the market itself.”

Yes, that's true, but at the same time, the number of cash deals is huge, and part of what made the housing bubble so bad was the amount of debt involved.  The problem is that rents rose substantially after the housing collapse, and now putting all those houses into the rental market is, of course, going to add significantly to the rental supply, and rents will have to drop sooner or later, if they haven't started already.

Japan, EU agree to start free trade negotiations

Although resistance to lower tariffs is high in some Japanese industries, such as long-protected rice farmers, manufacturers and others are concerned about being left behind by the trade agreements that other countries are negotiating.

Among the likely beneficiaries of free trade are Japan's giant manufacturing exporters such as Toyota Motor Corp., the world's biggest automaker.

 Well, that's always the problem with the whole free trade idea.  It's sold to people on the idea that each country ends up better off overall, but there will be some individuals that will be worse off.  Economists like to minimize that last part and make it sound relatively simple for those that are worse off to find new employment.  It kind of makes me wonder how many politicians would be in favor of free trade if they were the ones that would end up worse off.  I doubt there would be many.

And, your point is?

Stimulus Spending Only Delays Chronic Deflation

I have to admit, I had a hard time figuring out what the point of the above linked article was.  It seems to be that stimulus spending, as well as accommodating monetary policy, are actually working against deflation.  But Mr. Shilling implies that deflation is inevitable, so all we're doing is delaying it.  I don't think deflation is inevitable, but it may actually happen; the main thing is that it isn't happening right now.  In fact, we have some inflation.

For many, the New Deal didn’t end the Great Depression -- rearmament and the high government outlays to fight World War II did.

I agree.  The New Deal didn't end the Great Depression.  It may have eased it some, I don't know.  It was rearmament and high government outlays to fight World War II.  But, it was even more than that.

When the Japanese bombed Pearl Harbor, they effectively wiped-out our Navy.  We needed to rebuild an entire fleet, so the government basically commandeered the raw materials and productive capacity of the entire nation.  But the real improvement came after the war was over.  Because the government was buying stuff, purchasing tanks and airplanes and whatever other instruments of war they needed, they basically crowded-out American consumers.   And all of that stuff they were buying was getting sent to war, and basically destroyed, leading to the need to produce more stuff.  By the end of the war, Americans needed to replace their durable stuff, and industry was prepared to meet the demand.  Effectively, the war started a kind of slingshot effect, and the American economy entered a period of substantial growth.  The war had created the "supply reduction" that turned-out to be to politically unpopular to be carried out without something the American people could get behind: World War II.

So, I've always thought that the government should just start buying everything they can get their hands on and destroy it.  People would, of course, have a fit.  Politicians would lose their jobs, I'm sure, because while that is exactly what fixed the economy after the Great Depression, we don't have the war to make us feel like the destruction is for a worthy cause.  But, businesses would create jobs to supply the government with more stuff to destroy, and if the government was buying enough stuff, there wouldn't be enough stuff for people to buy, which would allow demand to build up and bring about the same slingshot effect that the war caused.

At least, that's my theory.  We'll probably never know if I'm right.

Unaffordable healthcare

Health Insurers Warn on Premiums

Somehow, you just had to know that when the government calls something "affordable," the price is going to go up, and that is what appears to be happening with insurance premiums as a result of the "Affordable Healthcare Act," or Obamacare.

Health insurers are privately warning brokers that premiums for many individuals and small businesses could increase sharply next year because of the health-care overhaul law, with the nation's biggest firm projecting that rates could more than double for some consumers buying their own plans.

Of course, there's a lot of talk about how the government is going to subsidize those premiums for some individuals, but the point is that it still costs more.  It is less affordable, and some people will be paying a lot more.  And those subsidies are, of course, paid by the taxpayers.  Stuff isn't free just because the government is paying.

One of my biggest concerns, though, is one that I haven't seen addressed anywhere yet.  The law only seems to address the cost of insurance, and not the cost of actual health care.  Even first year economics students are taught that insurance is a prime driver for increasing health care costs.  Because individuals aren't directly paying the cost of an office visit, they don't care what the cost of an office visit is, so demand for office visits stays the same even when the cost goes up.  The usual law of demand doesn't apply.  And when the cost of health care goes up, then the cost of insurance goes up with it.  Duh.

In a private presentation to brokers late last month, UnitedHealth Group Inc., the nation's largest carrier, said premiums for some consumers buying their own plans could go up as much as 116%, and small-business rates as much as 25% to 50%.

Those increases won't apply to everyone, and some people may even have to pay less, at least directly.   But then some will inevitably be paying more for their own insurance while subsidizing other people's insurance through taxes.

Insurers are "not being shy that premiums are going to increase in 2014," and are urging brokers to "brace our clients," said John Lacy, vice president of group benefits at Bouchard Insurance, a brokerage in Clearwater, Fla.

I think this article is also an attempt to brace their clients for higher insurance costs.  I didn't see the health care law referred to the "Affordable Healthcare Act" or anything similar anywhere in the article, perhaps to get taxpayers used to the idea that no legislation is going to make healthcare more affordable.

I expect Obamacare to have an impact on healthcare similar to the government subsidies of higher education.  We can expect that costs will skyrocket, while the quality of healthcare diminishes.  Bravo, Mr. President.

Cyprus deposit tax

After Cyprus vote, ECB says ready to offer liquidity within rules

Who was it that thought the idea of "taxing" bank deposits was a good idea in the first place?  And why?  Since now it sounds like they're going to get a helping hand without the theft, er, tax on deposits.

Update on ignoring the market and economy

Ignoring the market and economy

So, I finally got energized enough to correct the return blunder I made in the above linked post.  The resulting return is the same as if you had earned 3.04% over the same period.

Greenspan on "Squawk Box"

Greenspan: No 'Irrational Exuberance' in Stocks Now

Greenspan said in a " Squawk Box " interview that stocks by historical standards are "significantly undervalued" even considering the recent moves higher. He added that the payroll tax increase didn't dent spending because of rising asset prices.

Yeah, well, I don't really know how Mr. Greenspan arrived at the idea that stocks are "significantly undervalued."  And, I always like to hear comments like "the payroll tax increase didn't dent spending because of rising asset prices."  Okay... so, disposable income declined, but consumers spent more because of rising asset prices.  But, you can't just go out and spend assets, so you either have to sell them, which would make asset prices decline, or you have to borrow on the value of those assets.  Since asset prices are rising, I would say people are taking equity out of their assets through debt.  Sounds a lot like what got us in this mess in the first place.  But then, I'm not a former chairman of the Fed, so what do I know?  Probably not enough.  But, why do people care what Mr. Greenspan thinks?  From Calculated Risk, here are some things the former Fed chairman said in 1990 (a recession began in July 1990):

“In the very near term there’s little evidence that I can see to suggest the economy is tilting over [into recession].”
Chairman Greenspan, July 1990

“...those who argue that we are already in a recession I think are reasonably certain to be wrong.”
Greenspan, August 1990

“... the economy has not yet slipped into recession.”
Greenspan, October 1990

 So, I guess we should all take comfort in Mr. Greenspan's comments.  For what it's worth, I wouldn't characterize this market rally as "irrational exuberance" either.  Of course, I also wouldn't characterize stocks as being "significantly undervalued."  Maybe Mr. Greenspan has some stock he'd like the public to buy from him.  Not because he thinks stock are overvalued, mind you; he just needs the cash to pay his tax bill.

Forget statistics

Dow Winning Streak Captivates Traders, Tests Statisticians

"The odds are we won't go ten days, but the odds were we wouldn't go nine days," says Hugh Johnson, chairman & CIO at Johnson Advisors, in the attached video. "This is a pretty unusual experience, but markets don't go straight up, and you and I and probably everyone who is watching knows that instinctively."

Forget about odds.  Statistics (odds) are only meaningful when there is something random going on, and when the future is expected to resemble the past.  I'm unaware of any time in history when the Fed has taken on this kind of asset purchasing, and consequently, don't expect the future of this market to bear any real resemblance to the past.  This market isn't random, it's manipulated.  True, there may be a correction sometime soon, but statistics won't help you determine when that's going to happen, nor will statistics help you determine how big the correction will be.  Suffice it to say that the higher stock prices get, the riskier stocks are. 

Ignoring the market and economy

A short while ago, Bill McBride over at Calculated Risk posted an article on Business Cycles and Markets . The article asks why we care about exactly when recessions start or stop or whether we’re in a recession right now. Of course, the answer is that, if one can know when the start of a recession is in real time, then the investor can close his positions and reopen them at the bottom. And sure enough, if an investor could do that he would make a whole lot more money from his investments than if he just held through the recession. Interestingly, in the period starting in 2000, though, an investor would have done better if he missed the timing some.


Then I got to thinking about the last recession, and after stocks had lost nearly half their value, people were asking me what to do. My response was, “Well, nothing now, other than keep investing in whatever you’ve been investing in. If you thought it was a good investment before, then it’s an even better investment now.” I don’t know how many people actually did that, and nobody has thanked me for that bit of wisdom, even though, if they followed my advice, their investments would be worth a lot more now than they were before the crash with their added investment at much lower prices.


Then I started thinking about how the stock market is just now approaching the same level as it was in 2000 or so, for the second time. And people have said to me that it seems like they’re not really making anything in stocks. Of course, they’re not if they keep selling when the market tanks. I actually think they only think that because they see that the stock market is still not any higher than it was back in 2000.


And, eventually, I started thinking “What if someone just regularly invested on the first trading day of the year, oblivious to whatever was going on at the time? And what if he was the unluckiest person and always bought at the high for that day? And what if, in fact, he was so unlucky he only started investing in January 2000?” For one thing, he would have slept a lot better during the dot com bust and financial crisis, rather than lying awake worrying about what to do. For another, he wouldn’t have any idea whether he was making money or not. He at least would be oblivious to the fact that stocks have pretty much not gone anywhere since 2000.


So, I decided to have a look. For simplicity, I just assumed that dividends were paid at the end of the year, and reinvested. As it turns out, our uninformed investor would have made a 1.6 percent annualized return over this period of time, and this return is mostly due to dividends. Bear in mind, though, that this is just about the worst case scenario for an investor. He started investing at the top of the dot com bubble, and always bought at the highest price on the first trading day of the year.


So, I don’t know if there’s really any lesson in that. Of course, if I went back further, the results would have been significantly better. And it’s entirely possible to have done a lot worse. Panicking at the bottoms comes to mind as a major problem our investor friend isn’t in danger of having. And, the way the market is acting these days, it’s possible our hypothetical investor might end up being a lot better off if he keeps with the plan. Well, maybe.

EDIT: Soooo, I made a bit of a blunder on this post.  In figuring that 1.6 percent return, I just calculated the return on the total investment over 13 years, which of course is incorrect.  It was late when I wrote it, and it's even later now so I'm not inclined to fix it.  The point is still the same.  Most of the returns resulted from dividends, which isn't surprising given that stocks have just risen again to the same level.

News

IRS, H&R Block Release Statements About Processing Delays

This is why I've never understood the value of leaving a space blank, because you never know when someone is going to decide that they really do want an answer.

Billionaire Investors Gobble Up Twinkies: Hostess Snacks Sold For $410 Million

The 18,500 workers who were employed by bankrupt Hostess have lost their jobs. Metropoulos and Apollo stressed that they will add jobs by buying the brands.

I'm sure they will add jobs; just not that many, nor at the same pay rate.  $410 million seems kind of low for a brand that has been so well-known for so long, regardless of how "health conscious" Americans have become, and I actually don't believe Americans are all that health conscious.

EURO GOVT-"Weak" debt auction lifts Italian yields

Italian 10-year yields rose to an intraday high of 4.73 percent from around 4.65 percent at 1000 GMT, when bidding for the bonds was cut off. They were last 8 basis points up on the day at 4.68 percent.

These are strange days when a 10-year yield of 4.68 percent is high enough to raise much concern.  Makes me wonder what anyone was thinking when they were spending...

Retail Sales Data Show a Recovery Stuck at Stall Speed

Putting the pieces together with the better than expected Non-Farm Payrolls data and you see an economy that's got jobs growing on the low end, largely as a function of higher end consumers creating demand.

So, this is how the wealthy create jobs.  I could have sworn I heard a couple months ago that tax increases on the rich would result in fewer jobs.

Weekend news

Analysis: U.S. concern on China currency fades as yuan grinds higher

On top of that, the United States has faced fury from other countries for an aggressive easing of monetary policy that critics contend seeks to drive down the dollar, a charge that puts Washington in a tough spot to criticize China.

Hold on there!  Those critics seem to have forgotten that we said we weren't intentionally weakening our currency.  That's just a happy side effect of turning on the printing presses.  After all, in this day, the actual outcome isn't what matters; what matters is what people say, and as long as we don't say we're intentionally weakening the dollar it isn't happening.

Hopefully, anybody reading the above will recognize the sarcasm.

For the middle class, expenses grow faster than paychecks

There's one more big squeeze hitting households: health care. Since 2002, insurance premiums have increased 97%, rising three times as fast as wages, according to Kaiser Family Foundation/Health Research & Educational Trust.

Yeah, and get ready for even more when Obamacare actually kicks in.  I don't see how anyone can think forcing everyone to have health insurance is going to end up good.  Even if individuals pay less directly, it will only be through taxpayer subsidies. Even basic economics texts explain how insurance has driven up the cost of health care in the U.S.  I suggest the president and his economic advisers try reading one.

Dow record not necessarily a buy signal

I've never really understood why anyone would think that a new record high was a buy signal for anything, so the headline seems redundant.

"If I had to pick a category, I'd still be looking at equities," Fantozzi said. "We still think the market is going to post positive gains for the year."

Me too, but I'm still watching for that bad ending I referenced in an earlier post.  As far as the second part of the above quote, I hope that's either a misquote, or Fantozzi misspoke.  With the S&P up about 6 percent this year, I'd hate to see stocks end down for the whole year.  I suspect Fantozzi meant to say "we still think the market is going to post positive gains in the rest of the year."  Then again, I wouldn't want to read something into a statement like that that wasn't already there.

Global economy: Shafts of sunshine try to pierce thick clouds
I didn't really see the "shafts of sunshine" in the article.

"Private investment is likely to have to play a dominant role if we're going to have a serious economic rebound," Thompson said.

Yeah, good luck with that.  I've been thinking that private investment is heading for greener pastures for a long time now.

Business week in review

Fed says 18 biggest US banks in stronger position

Under the stress tests' most severe scenario, the United States would undergo a recession in which unemployment would reach nearly 12 percent, stocks would lose half their value and home prices would plunge 20 percent.

I'm not sure of the value of a stress test in which the most severe scenario isn't all that severe.  I mean, we arguably already have 12 percent real unemployment, home prices are (the last time I checked) about 20 percent above the long-term trend, so a 20 percent drop in home prices wouldn't be terribly surprising at this point, and stocks are currently somewhat overvalued and a 50 percent drop doesn't seem that unlikely.

Payrolls Rise as U.S. Jobless Rate Reaches Four-Year Low

The decline reflected both a gain in employment and an increase in people leaving the labor force.

Another example of how lowering the bar makes some things look better than they were.  People leave the labor force, unemployment drops, and potential GDP also drops.  We'll close that recessionary gap one way or the other.

Jack Welch: 'I'd Give Einhorn the Back of My Hand'
So would I.  Of course, I'd give Jack Welch the same.

Former General Electric (GE) CEO Jack Welch says Apple (AAPL) deserves better than the treatment it's getting from David Einhorn, the hedge-fund manager pressuring the iPhone maker to cough up dividends.

Since when does a corporation deserve better treatment than it gives its shareholders?  Personally, I've been thinking that AAPL's senior management is considering taking the company private and moving.  Everyone else seems to think the company should buy back shares... why not buy them all back?  Move to some other country where the tax rate is more business friendly, and free up that cash horde.  Just a thought.

Headlines

Household Worth in U.S. Rises by $1.17 Trillion on Housing

So, it's okay that workers are getting paid less, because their homes are worth more.  It explains how, with lower wages and higher taxes, people are spending more.  Unfortunately, home prices are being artificially inflated by the Fed as well as the Federal Government, so it remains to be seen if this rise in household worth is equally artificial.

"Automakers are among those benefiting from improving household balance sheets, which is helping support sales beyond car-owners’ need to replace older models."

 One of my pet peeves about American consumers is that they seem to think they need to spend beyond their needs, then complain that they don't have enough.  The hope here is that the extra spending will lead to some real economic growth, which will lead to more spending... and then eventually we can do this all over again.

Unfortunately, I'm out of time right now.  Leave a comment, and I'll be back with more.

Headlines

Don’t Fight the Tape But “It’s Not Going to End Well”: Todd Harrison

Does a rally ever end well?  The way I see it, the longer this rally goes on, the worse the end is going to be.

"In addition, 43% of respondents to our poll yesterday said they are "still waiting to get back in" to the market, which is up from 40% when Yahoo! Finance asked the same question back on Jan. 28."

I'm not sure what anyone is actually waiting for.  Well, other than the bad end, that is.  But, if there's really that much money still on the sidelines, it's possible it won't end badly at all, at least until after the rally that results from all those people deciding that it's time to "get back in."

"I’m going to trade risk both ways and let the market dictate whether fear or greed is the appropriate mood right now."

Probably a good tactic, if you're in a position to do that.  The only problem I have with this comment is the part about "fear or greed."  First, I don't think there's much difference between fear and greed, although I think Mr. Harrison was referring to fear of losses versus fear of missing out on gains (greed).  And according to the previously quoted line, 43% of respondents are apparently not afraid of missing out on gains.  At least, not yet.

I still think this rally is more about QE than anything, which is why the market is up so much while there is still, apparently, lots of money sidelined.

How Your Kids Are Learning Not to Blow Your Cash

"The trend is known as "gamification" because the learning comes through computer-game simulations of real-world financial events."

So, some people think that playing a game actually teaches kids about the realities of losing money?  I've watched kids play games... and there's a whole lot of quitting and restarting.  Real life doesn't work that way, at least not usually.

Private Jobs Continue to Show Signs of Growth

"The labor market recovery is accelerating with rising demand creating fresh opportunities well beyond the financial crisis."

So, it turns out that jobs aren't created by the rich, but in fact are created by demand.  Maybe this whole fiscal cliff / sequester deal will turn out good, just like the end of World War II.  I'm not convinced yet, though.

The above comments are just my opinions and takes on what's happening in the markets.  Feel free to leave your own comments.  Perhaps you'll change my mind.

Headlines

Dow Punches Through All-Time High: US Stocks Are Back! American People? Not so Much

Great!  Unfortunately, according to this article, it sure looks like the stock market gains have been at the expense of American labor.  But, of course, reality is never as good as the headlines:

(via Twitter)
Jeff Macke @JeffMacke

The Dow is... : 1) a ridiculous index 2) only trading at 12,840 in 2007 dollars 3) 1,574 pts below a "real" new high


Services sector expands in February

"There have been signs that Americans are willing to keep spending, despite higher taxes. Auto sales rose slightly in February after jumping the previous month. And measures of consumer confidence rebounded after plunging at the end of last year."

 So, let me get this straight.  Labor wages are falling, taxes are rising, and American consumers are "willing to keep spending."  Sounds like someone needs to take the kids' credit cards away.

IKEA Pulls Chocolate Cake

"Chinese officials detected coliform bacteria, which is present in fecal matter."

I hope that's not what American consumers are willing to keep spending on.

Morning news

Oops! Scotch Whisky Accidentally Flushed Down Drain

"Oh, and the company assured NBCNews.com that there would be no shortage of the "water of life" as a result."

But, was it enough to make my suggestion of stocking up on whiskey look like pure genius?  Probably not.


Billionaire Warren Buffett sees 'hair trigger' when Fed ups rates 

He must be reading my blog.


Broad Losses for U.S. Stocks

"Worries about a potential budget deal provided little cheer."

And some people think grammar isn't important.