Big Day for Unemployment Tomorrow

unemployment rate stocksInvestors cautiously traded with mixed results, due to the high anticipation of upcoming employment data. However, the Dow was able to close up a few points and is getting ever so close to breaking that 11000 mark. Volume was critically low, possibly due to the holiday week as well as Spring Break, which tends to be a popular vacation time for many people. Tomorrow's ADP employment number, holds a bit more weight than most, due to its relationship with Friday's unemployment number.

Analysts are expecting a 200,000 increase in jobs for the month of March, however, it has also been estimated that over 100,000 of those jobs can be accounted for by government hiring for census workers. Considering that over 50% of Friday's number could be temporary government employees, investors are more likely to pay more attention to tomorrows ADP number than they usually do. Sure, Friday's number will definitely carry weight, as it always does, but expect a very inflated number.

Much of the recent rally has been in anticipation of a better month than we have seen recently. Retailers are expected to be performing better, home prices seem to be more stable, and the unemployment rate seems to have peaked. Really? All though some of these things may be true, it is always important to evaluate what is causing the performance and if it is sustainable. One thing is for sure, the housing market is looking at a rude awakening if the government stays with its plan to take away the tax incentive for home buyers, and here's why.

Despite recent data showing a smaller decrease in home values for January and February, more recent data is showing that we may start to see a double dip. The main fueling factors for home buying at this point in time is the tax incentive offered and the ability to secure a good loan. Without these two very critical factors, the demand for homes would most likely decrease over 50% (half the amount of buyers would be gone). If that were the case and then coupled with the amount of default and foreclosures that still exist in our market, we would sure to see another strong strike to home prices. Once again, this is predicated on whether the government does allow for nature to take its course, with no intervention. Whatever the case may be, people hoping that we had reached bottom for home prices, that is not the case.

Another aggressive dip in home prices is sure to bring down investor confidence. This is the one big factor frustrating me to go long more on equities. Sure, the government has pumped plenty of money to make things look sunny for now, but what happens when that runs out. This is why I continue to remain rather conservative and look for more solid investment opportunities in currencies, commodities, and energy. Definitely look for an aggressive move both tomorrow and Friday, as we see whether we beat or fall short of employment expectations. Happy Trading.

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Earnings Rally Possible

retail rallyMarkets opened up with a rather aggressive rally and sustained for most of the day until an aggressive sell off occurred to close out the day. The Dow closed up just 5 points, however, the S&P ended up closing in the red. Good earnings reports from the tech and retail sector as well as a reduction in initial jobless claims helped spark the early buying.

As the low volume trading continues to occur in markets, these volatile end of day swings will most likely happen often. It doesn't take much at this point to move the market, which makes it very vulnerable to manipulation. Believe it or not, there are actually a few reasons I believe we may see this rally extend a bit further before a big pullback, and here is why.

First of all, there are a couple reasons to believe that we are in for a decent earnings season this next quarter. Just from my own business, I have been able to tell that consumers have been more active the past few months. With the help of trillions spent from the US government, some money finally became available to the consumer. As a result, some consumers were able to go out and spend this money thinking that the worst is behind us. It is almost like a sun spot in the middle of a storm. When you think about the lag time it takes for that money to actually reach the consumer, it makes sense that the economy is now starting to respond. As a result, I believe consumers got out a bit more this past quarter and was able to spend some of Uncle Sam's cash.

Another reason to expect good earnings is that there has been almost zero early bad earning warnings. If approaching a quarter where companies are looking to have much lower earnings than expected, they usually like to ease in the news by issuing a premature "warning" of lower earnings. However, when earnings are looking to beat expectations, well they always want this news to be reported as a surprise to help spark a run on the stock. The fact that we've seen almost none this quarter, leads me to believe that earnings should be relatively strong.

Considering the market is reacting very sensitively at this point to economic data, I think a strong earnings season could definitely bolster up markets for a bit. However, as I've said before, the numbers are skewed to a degree. Much of the money that has been spent is government money, which has to be paid back eventually. So although it may look like we heading up, I definitely expect to see some more rough times to come. However, retailers and real estate REITS should perform decently well the next couple months. We saw from Best Buy today, earnings are already looking good. Happy Trading.

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Bonds Bust Markets

Selling transpired in Wall Street on Wednesday, as a drop in Treasurys, due to 10-year swap spreads going negative for the first time, caused for the retreat in equities. Interest rates for Treasurys to help fill the need for the new debt issued. My ETFs that I purchased as an interest rate hedge (post from last week) performed very well today and I believe there are more gains to come. It comes back to the simple economic principle of supply and demand. We know the amount of US debt that has been issued and continues to be issued and it is only a matter of time until "the demand" weakens. We saw that today.

As a result of the drop in Treasurys, we also saw a rise in the dollar. The dollar has been performing very this last month and was helped more today, due to the downgrade of Portugal's credit rating. UUP is one of those good rocks for me that keeps chugging away and brings in moderate returns. However, continual abuse of currency printing will eventually bring the dollar to worthless values (see chart below).

dollar spending abuse
Inflation isn't a worry for many at this point in the game. They feel that all measures should be taken to keep the economy afloat. I do agree that the government should do all that they can, but they are beginning to go much more and beyond than what is required. As a result, many are worried for what consequences may lie ahead. Sure, inflation is not an immediate threat, but we are almost guaranteed to see it in coming years. Thomas Hoenig, the President of the Federal Reserve bank of Kansas City said the following:

“When I was named president of the Federal Reserve Bank of Kansas City in 1991, my 85-year old neighbor gave me a 500,000 mark German note. He had been in Germany during its hyperinflation, and told me that in 1921, the note would have bought a house. In 1923, it would not even buy a loaf of bread. He said, ‘I want you to have this note as a reminder. Your duty is to protect the value of the currency.’ That note is framed and hanging in my office.

“Someone recently wrote that I evoked ‘hyperinflation’ for effect. Many say it could never happen here in the U.S. To them I ask, ‘Would anyone have believed three years ago that the Federal Reserve would have $1.25 trillion in mortgage-backed securities on its books today?’ Not likely. So I ask your indulgence in reminding all that the unthinkable becomes possible when the economy is under severe stress.

“If German hyperinflation seems an unrealistic example from the distant past, then let’s come forward in time. Many have noted that in the 1960s, the Federal Reserve’s willingness to accommodate fiscal demands and help finance spending on the Great Society and the Vietnam War contributed to a period of accelerating price increases.

“Although the Federal Reserve was a reluctant participant, it accepted the view that monetary policy should work in the same direction as the Congress and the administration’s goals and help finance at least part of their spending programs. Monetary policy accommodation during this period contributed to an increase in inflation from roughly 1½ percent in 1965 to almost 6 percent in 1970. It also helped set the stage for the Great Inflation of the 1970s as inflation expectations gradually became unanchored …

“Walter Bagehot’s famous dictum about banks holds equally true for governments — once their soundness is questioned, it’s too late. At that moment, governments and their citizens are forced to make sizeable, painful fiscal adjustments.”

Well, at least some of the leaders are aware of whats going on. Happy Trading.

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Obama Healthcare Stocks

obama healthcareMost of the recent news has been dominated either by Tiger Wood's second interview (which doesn't affect a lot of stocks) and the recent passing of President Obama's coveted health care bill by Congress. There are still changes to be made to the bill, but for the most part, the rough sketch is completed. You better believe that the enforcing of this bill will cause some noise in Wall Street.

First off, I believe those benefiting the most from the health care passing are the pharmaceuticals. Much of their current operations and restrictions shouldn't change much, however, we should expect to see a very significant jump in pharmaceutical sales as President Obama hopes to insure almost everyone in the country and you better believe a lot of those people will be on meds! So as a result, I expect to see continuing growth for pharmaceuticals. This same principle can be applied to health care manufacturers.

On the other end, there will be some who get dragged with this bill. The companies that stand out in my mind are insurance companies. This bill is an insurance company's nightmare, full of new restrictions and puppet strings that are sure to dig into profits. It's no secret that insurance companies have been getting away with highway robbery for years now (and they're stock holders have been rewarded for that!), but uncertainty tends to spur selling.

I exited out of my Citi stock today. It was up another 4%, and I had made enough profits to reward me for the short risk. I am real hesitant to enter into more stocks at this point until this bill becomes more firm and volume begins to increase in the market. We are in a very unorthodox trading environment and as a result, we could see some crazy swings in a short amount of time. So I'm sticking with the waiting game.

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Watch Out For Expiring Options

AIG rallyIt seemed fitting for the market to miraculously close "green" once more today on this St. Patrick's Day (about the 7th day in a row) after what looked to be a very aggressive sell off heading into close. However, the sell off was stopped in its tracks with about a half hour to go, only to rebound back into positive to close. Once again accompanying this rebounding close, was another very low day of volume.

VIX levels are at 2008 lows, which does not give bears much confidence of a strong move downward. However, just as we saw from 2007, as the market gets going, that VIX can move fast. Considering that, historically, not much significant happens on the short side during low volume trading has discouraged bears from being more aggressive. Bulls, on the other hand, have a hard time believing that the market keeps going up. They are almost wanting a dip, just so that another potential rally could have some momentum.

Important data being reported tomorrow is CPI and new jobless claims at the opening. As usual, these should definitely set the mood for most of the days trading trends. So far, CPI has not played much of a role in influencing investors. Jobless claims could definitely put a wedge in trading if they look much worse than expected.

One thing bears need to be careful about tomorrows trading is the big options expiration date. There is a lot of open interest in options for the S&P at 1170 and 1175 levels. In most cases, with the big options, we tend to say the market move towards those levels on expiration day. If that is the case tomorrow, we are in for yet another green trading. I do expect a pull back here shortly, but tomorrow is set up for another green day of trading.

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My Freddie Mac and Fannie Mae positions performed very well today, as these government backed entities are finding more investors. If given another big bump tomorrow, I will most likely exit my positions on these, as I do not want to hold on to them much longer. Watch for volume being low once again tomorrow, which could be another reason why markets move higher. At any rate, it should be a more exciting day of trading. Happy Trading.

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Dealing With the Deficit

credit crashOnce again we were approaching a negative trading day on Tuesday, when magically the market was reversed during the last 45 minutes of trading. Today's ending was a very aggressive reversal, which is very suspect, considering the extremely low volume that has been taking place. Market movers are definitely active.

I have expressed my concerns with rising interest rates in previous posts. Much of this concern is tied not only with the Fed's decision to eventually raise rates, but also with the continual massive spending going on with the government. It seems like nowadays we don't even hear about details of government spending. Everyone is so focused on unemployment, home prices, and inflation. Although these are also important economic factors, massive deficit build up can be a big problem in an already severely weak economy.

The big problem with increasing the deficit during this time is that in turn credit begins to close. We started out by feeling a "credit crunch" in the early stages of the recession, which was tightening of the available lending in markets. However, as deficits are deepening, we are beginning to see credit actually taken from the consumer. Home loans are becoming due, as are small business and commercial real estate loans. Forget the "credit crunch", we are now experiencing the credit vacuum.

To show just how out of hand government borrowing is getting, below is a chart of the government issued debt, JUST FOR FEBRUARY! Just to give this perspective. During the years of Ronald Reagan, Reagan was criticized for indulging in far too much government spending. Well, February's $221 billion was more than Ronald Reagan added up the entire year of 1986, which was his worst year for the deficit. Yikes!

* $42 billion in 5-year notes,

* $32 billion in 7-year Treasury notes,

* $44 billion in 2-year notes,

* $8 billion in 30-year TIPS bonds,

* $28 billion of 6-month bills,

* $26 billion of 3-month bills,

* $31 billion of 4-week bills, and

* $25 billion of cash management bills.

Its crucial not to forget what Uncle Sam is doing with the budget, as it will most definitely affect us directly. Due to the massive government spending, signs of this massive deficit may have a pretty severe lag time, but do not be fooled, it will show its ugly face sooner or later. Happy Trading.

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S&P Peaking

S&P Trends reportAfter a pretty moderate trading day on Friday, Monday looked to open up the week on the downside, that is until the Dow conveniently rallied for over 50 points during the last thirty minutes of trading. The fact that most of this recent rebound from February's lows have been done with mostly really low volume poses a lot of questions, which we'll talk more about later.

We're in a very critical state in the markets right now. We are hovering gently over January's highs, but are not "bursting through", which is usually the case when entering another run up in the markets. The float-like movement would usually indicate that the index is oversold at the point, especially when these technicals were beaten on a Friday, in which markets usually heavily reward new thresholds. However, during trading this past Friday, this was not the case.

The newest free video released from MarketTrends (check it out, a great video), in my opinion, explains the recent movement of the S&P quite well, while also giving some projections of where we might be heading in the near future. Most of you know that I have been expecting a rather strong pullback for a while now, so this is no surprise to me. In fact, China's Premier warned about the possibility of a "double dip" recession, due to financial system's risk as well as increasing unemployment problems. Many of our domestic economists refute this notion, saying the worst is well behind us. We will know who is correct in the next few months.

The US dollar is gaining some strength right now, due to expectations of a change with the Fed. Many are expecting the flow of the dollar to get tightened shortly, as the Fed has made it clear of its intentions to raise rates here in the near term. UUP continues to be performing well for me, however, at this point, I am beginning to look for an exit. You usually get the best of the run during the anticipation of the news.

From watching the video you will see that this week can be a very telling week for markets and should start to show more direction of where we're heading in the long term. Low volume trading is a big condition slowing my desire to trade more at this point, however, that volume cannot stay low for much longer. Happy Trading.

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We're Back to January's Highs

consumer confidence reportAfter another back and forth day of trading, the Dow was able to close up 44 points after a pretty strong end of day rally. We are now treading in a very critical trading zone, as today's closed matched January's highs. The question is will the stock market be able to break through these support level or are we in for another pull back? A lot of these answers will be found with tomorrow's economic numbers.

I purchased a fair share of Citi this morning, as I discussed in yesterday's post, which worked out quite well, as Citi closed over 5% today. Like I said yesterday, I plan for my positions in this and other upcoming longs to be very brief, as I do believe there is a very quick window to make some profits. For now, investors are buying into the notion that Citi is indeed undervalued, especially after being backed by the government. I will look to exit out of it as soon as I make some healthy returns.

Tomorrow's performance will most likely be dictated by two major economic announcements. First, we will be receiving retail sales for February. Analysts are expecting a slight drop in retail sales from the month prior. As of now, even a retail report coming in line with expectations will most likely cause for a bit of cheer for investors. Second, we will be looking at the new consumer confidence report that is released. This is very crucial, as many analysts believe the consumer is beginning to come out of hibernation. They are expecting a slight increase from January's number, which if that were to happen, we would probably get a bump. Sure, they may be a bit more spending going on than was last year at this time, but the consumer is still very beaten up from the bast 18 months. So if all goes as planned by the economists, we could end this week in a rally, but when do things go as planned these days?

One company catching my eye at this point is Petroleum Development Company (PETD). This is a company that focuses on natural gas. When looking at their chart, they are looking quite nice for a little run. Plus, oil and energy should remain pretty resilient at this point for a bit longer. Some shares will most likely be purchased tomorrow.

So for tomorrow, all eyes on retail sales and consumer confidence. If these number get beaten well, we may be in for a strong end of week rally. However, if these numbers disappoint again, I would expect to see a 100 point loss day. Happy Trading.

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Bank Stocks to Buy

citi bank stockIf you just checked Wednesday's closing prices, you may have thought it was just another day of flat trading. However, despite having the Dow only close up a couple points, there was quite a bit of volatility in today's trading. New things are developing in different areas of the market, which perks my interest.

I'm sure by this point, most readers of my site consider me to be a very strong bear trader. Well, that is because most of this site has existed during some of the worst economic days we've seen in a decade. I try to stay close to fundamental economic data, as in times past, that has worked out quite well for me. When economic times are on the upside, I become very bullish. So please do not misinterpret me as a "PermaBear" trader. I want nothing more than for our economy to begin to thrive again, however I cannot cast aside the amazing amount of careless management and spending that has transpired over the past several years. It was only a matter of time until it caught up to us, and it will take some time to rebuild.

On that note, I don't see many appealing "buys" for me, as of now, that gives me complete confidence for my portfolio. However, I may consider pulling some long buys as an upcoming short hedge, as I do see a bit of short term momentum in some financials (if you could believe it!). For the past two days, government backed financial institutions have seen some strong gains, due to investors believing that these institutions are undervalued. Other banking institutions have seen much stronger rebounds than that of Citi, Freddie Mac, and Fannie Mae. As a result, we're seeing quite a bit of money being moved to these institutions. AIG jumped 10% today as they also fall into the government backed stack of institutions. I do feel that bulls are getting anxious and are finding a comfortable sweet spot, for the time being, in the financial sector, which has been a difficult sector to find strength for the time being.

My play in these companies will be very quick with strict stop losses. I do not feel that these institutions have seen the last of their problems, only that there is a quick opportunity at this point. One thing keeping my positions quick is the knowledge that the US government has close to a 30% stake in Citi and is eligible to begin selling those shares (for a profit) later this month. Right now, I think the government will make money anywhere they see fit.

On the short side, one ETF setting up for a soaring is YCS. YCS is the UltraShort Yen ETF. China is facing some serious inflationary problems, and such, should cause for a bit of downward push for the Yen. In addition to that, technically speaking, the Yen is looking very prime on the short side. I may even consider actually shorting YCL, which is the long equivalent of YCS.

It will be interesting to see how markets close out on Thursday and Friday. We are circling back towards earnings season, which can be a spark or downer for the markets. I definitely feel more certainty in the markets will be coming very shortly. Happy Trading.

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Making Money From Rising Interest Rates

interest rate increase stocksThis week started off with a relatively flat trading day, as the Dow closed down just 13 points. It bobbled back and forth from red to green, but remained relatively flat for most of the day. There still lacks a "spark" for investors to get either excited or scared about the market. Each day rotates with positive and negative indicators, which just frustrates investors more. So for me, instead of playing a guessing game, I'm looking harder at things that have a bit more transparency and likelihood.

One thing is almost certain, the government cannot afford to participate much longer in 0% interest rates and other programs that are spiking the deficit. Our deficit for 2010, alone, is expected to be $1.6 trillion, followed by an additional $1.3 trillion added in 2011. We know it is the government's hope and intention to try and minimize the degree of economic decay throughout this recession, however, they are going to have to start picking and choosing their battles.

For just about the past year, we have enjoyed o% interest rates from the Fed. As of now, its presence is almost not even felt, which is scary when you consider just how monumental it is to have, essentially, a 0% discount rate from the Fed. Even though the 0% is a big factor in helping what little lending is being done at the moment, the fact is the Fed can't afford to keep it at such low levels for much longer. We can expect a hike in interest rates shortly. Maybe not the next FOMC meeting, but I believe it is in our very near future. As a result, how can I benefit from such a move? Well, here are a few ETF's that are working their way in my portfolio as a hopeful hedge against the hiking rates.

First off, what affect will climbing rates have on our economy? The most certain answer is a big influence on the debt markets, especially US Treasuries. As soon as volatility in interest rates begin to show, the first hard hit will be seen in long term bonds. US Treasuries are no exception to this. PST and TMV are both SHORT, longer term US Treasuries. PST is the UltraShort 7-10 year US Treasury, where TMV is the SHORT 3X 30 year US Treasury. In a normal supply and demand environment, as interest rates make their way up, we should start seeing rather aggressive selling of these long term bonds, thus making profits from these two ETFs potentially strong.

Well, where will all these liquidating bond holders go? The answer is shorter term bonds. In environments of increasing volatility in interest rates, investors tend to shorten their risk with shorter term lengths. They don't mind giving up some of their yield in return of a much shorter holding period. As a result, investors can then still earn a decent return, while not having to lock themselves in a 30 year bond. Bonds should continue to hold strong in the midst of this tumultous economy, so demand for Treasuries should remain strong. SHY is the iShares 1-3 year US Treasury ETF. Sure, with rising rates even short term bonds could suffer as well, however, I feel that they still have a much greater potential for stronger yields than long term bonds.

For the more sophisticated trader, a put option buy on the inverse of the above ETFs may be a good consideration, in hopes to have any ETF decay play to your advantage. In that case, a put option would be purchased on SHV, UST, and TMF for essentially the same effect. However, do keep in mind that put options have time restraints, where you can hold the actual ETF with no expiration period. For those that are looking for some practice trading, check out Wall Street Survivor, which is a fun fantasy stock trading site. Just some food for thought. Happy Trading.

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Buying Gold

gold investmentGold is once again returning to investor's radar as uncertainty in the economy continues to grow. Also, worries for inflation can create a sharp demand for gold in a short period of time. So many are asking should I be buying gold?

Inflation no doubt is a coming concern. Just how close we are to inflation is a subject many are currently debating. I believe the severe concern is a couple years out. However, some feel that we could see it as early as the beginning of next year. When inflation does indeed begin to show, then buying into gold stock or even if buying gold coins, you will most likely see big gains. As of now, gold seems to be bouncing back and forth, much like oil, trying to find its position in the current market. As markets strengthen, commodities tend to get left behind as investors begin chasing the large returns.

One great way to bring gold into your portfolio is by establishing gold in your IRA accounts. Gold and other precious metals make a great addition to an IRA account as they show great resilience over time. I always like to have a small portion of my retirement accounts in precious metals.

For current investment purchases, I am refraining from buying gold in my active portfolio. The recent moves have not breached any major support levels, so it is quite grey on both the buy and sell side. I do feel that in the future, gold will bring some record setting gains to portfolios in a very quick amount of time. We're not there yet, but it's on the up and coming radar.

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Retail Numbers & Jobless Claims...A Big Thursday

retail sales slumpAfter spending most of the day in the green, the Dow was able to make its way down into the red by the closing bell, closing down just over 9 points. Worries in the health care business due to increase in premiums led to a sell off the sector. Personally, I was surprised to see the selling close. Lately, a strong buying turn around has been the closing trend. At any rate, the closing was rather flat and was not too significant.

Tomorrow acts as a hearty day for economic data. The much anticipated retail sales number for February will be announced following the opening bell tomorrow as will initial jobless claims. If this isn't enough, we close the week on Friday with the fun unemployment numbers. Depending on the data, these next two days have been set up to either fuel a short rally or set up an aggressive sell off. Considering how stagnant we have been of late, surprising data (either for better or for worse) should be enough to wake investors up. Investors cannot afford to be as patient in 2010 as they were in 2009. A lot of money was made from 2004-2007. Considering that, many could afford to be patient with their portfolio. However, carrying cash for two straight years starts to weigh heavy for many investors.

The outlook for retail is already set pretty low for tomorrow, considering the bad weather that hit the US. So if we indeed see a very devastating number come in below the already low set expectation, watch out for a pretty strong sell off. If numbers surprise and actually beat expectations, I expect the exact opposite. For the buy side, I expect so see some better than expected numbers in online retailers. One person's problem becomes another person's success. Just as the weather may have kept many people away from the malls, you can be sure that many of those people were still buying, just online. Amazon, Ebay, and Overstock are just a few that I feel could produce some surprising earnings this quarter and get a small run for the time being.

The Fed will most likely look to keep rates low for the time being, considering the continual rises we are seeing in unemployment. One way to quickly kill momentum to a recovery is to hike up rates. As of now, many do not notice the impact that the 0% Fed rate does for the economy. Considering its arrival in 2008, it has almost become a standard part of the economy. However, even a slight raise in rates would shake the economy enough to cause for concern of yet another credit crisis. Considering inflation still remains a distant concern, I don't see the Fed making a move quite yet. Happy Trading.

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The Blame Game For The Economy

bad weather stocksAs we continue to kick of 2010, many are still patiently tapping their feet waiting for this so called recovery that many promised would begin early this year. February clearly slowed the anticipation of a quick rebound as most economic data came in well below expectations. As an attempt to calm the nerves of anxious investors, the government, as well as other analysts, are pointing fingers in every direction to try and assign blame to the delay in the recovery. If investors begin to realize that indeed our economy is just not recovering at this time, we would most likely see yet another strong leg down in markets. For this reason, government officials are staying busy trying to come up with new why's.

The newest to be put on the blame list is the weather. No doubt this past winter has been a record setting one for many parts of the country. Going into the stormy seasons, we new we were heading into another anticipated "El Nino" winter, which usually brings significantly more rain and snow. Analysts are stating that much of the recent sluggish economic numbers can be largely blamed on the bad weather. Home sales, consumer confidence, retail sales, and unemployment. Really? Sure, we can assign the weather some portion of blame for certain dragging indicators, but it is hard for me to see how a few bad storms can effect businesses from hiring new employees. Lets just call a spade a spade and realize that the recovery song may have been sung a bit too soon.

In regards to the housing market, the fact that remains is that there is just too much bank owned inventory to bring up prices. Refinance rates are at record lows and even with a massive increase in home mortgage refinancing, foreclosures are still rising. As the Fed looks to increase interest rates, the ability to refinance will not be as easy. Thus, bringing more obstacles to home buyers.

One severe contradiction to the assumption of the weather bringing down the economy is found when we look back in history. In the mid 1990's, we experienced an "El Nino" winter, which amounted to record amounts of rainfall and snow throughout the entire country. Floods damaged cities, hurricanes destroyed homes, and people were snowed in for days. All during this time, the economy was experiencing extreme strides in growth. Job growth was blossoming, retail sales remained strong, as did home sales. What made this weather nightmare such a delight for investors.

As for now, the blame game seems to be working, for the moment, as March has been all green thus far. Investors are already looking forward, hoping that the blip in February blows aways with the storms. As for me, I don't think it will be that simple. Consumers are experiencing a continual drop in confidence, which is making it very hard for retailers to sell through dragging inventories. As a result, blowout sale prices are the majority of goods being sold at this point, which is not enough for retailers to make it at this point. This is main reason why we are continuing to see an increase in jobless claims.

Thus far, much of the bailout and relief programs have been focused on banks and temporary relief to big company's balance sheets. However, not much has been given back to the consumer. Without consumer relief, a change in direction for our economy is distant. Our economy has always been driven by the consumer. The government can try to take the wheel for a time, but without the consumer, the growth is not sustainable. We can be sure that eventually that will become evident in the markets. Happy Trading

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