Musing on Tuesday Looks Sideways From Here

• After a long weekend last stocks rebounded with a triple digit pop on confidence that the Greece problem was being handled. Overall stocks and commodities are off their January 17th highs.
• At the close of business Thursday the Federal Reserve increased the lending rate it charges banks, catching everyone by surprise. Officially the Fed signaled it was dismantling emergency measures created by the financial crisis. Unofficially Fed officials were seen as being 'displeased' banks were engaging in 'carry-trade', borrowing cheap dollars from the government and reinvesting it elsewhere at a higher rate of return. Friday the markets closed slightly up. The number of banks closing year to date is 20.
• Rotation into large caps means there is a lot more life to this market going forward. Weakness in emerging markets, small caps. Vanguard Total Market down 10%, now at November 09 level.
• Businessweek, February 22nd, in their Money Report, using the Fibonacci formula, predicts an 11% drop in the DOW from January high. (see my Nov 25th 09 blog on Fibonacci).
• Who were the winners after the 08-09 market collapse? Vanguard found that the median account balance for 401k participants that made contributions from 09/30/07 through 09/30/09 increased by 7%. Younger workers with smaller accounts saw their accounts increase 62-290%! Yes, people made money by removing emotion from the investment process and by doing what they had been doing before the crash.
• Saudi central banker affirms U.S. dollar as global currency and rejected China's (and others) insistence on replacement.
• Just in case you were not paying attention: It ain't over till it's over. Most of the stimulus is yet to be paid out. Money for infrastructure and states has taken months to organize. Some say it'll mean jobs for over 500,000, while the government predicts it will be 2 million. Of the $179 billion in state paid stimulus last year $117 billion spent on schools, Medicaid, food stamps and unemployment benefits.
• According to some Japan starting to get traction. A long time awaiting.
• While some bad mouth the last decade's investment performance some active fund managers point to solid single digit returns that beat bonds handily.
• Active management or indexing? Argument is that indexing better performing that most active managers. Flip side is that there are always the Ted Williams-like managers who crush the indices.
• IMF sells another 191 tons of gold. Soros increases his gold holdings.
• Four up days in a shortened week. Factories 'gearing' up to begin hiring. Home building increasing, barely, but increasing.
• Good news comes from Morningstar's Robert Johnson who reports that the recovery has legs. You'll have to ask for his report but suffice he believes we're in the 'early' stages of a robust recovery,
• Finally, long-awaited misery-saga Tiger said he was sorry-sob and it was broadcast around the world. Me? I'm waiting for the bankers, hedge funds, brokerage firms and government hacks to own up and say their public Mea Culpa's.

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