Hello Spring

I see a few signs of spring now: the birds are chirping quite loudly and the crocuses and daffodils are perking up ... not bloomed yet, though. Overnight temperatures are still quite cold in the 20F range, but the ground is thawed.

Signs abound that last week marked a low and successful retest of the January lows. Nothing is certain in investing, though. Conditions in credit markets improved. Barron's intermediate grade bond index declined 20 bps from 8.61% to 8.41%, still too high, but that's a reversal from the steady increases for weeks.

Gasoline demand in the US is definitely tracking lower than last year. An article in this morning's WSJ says that ethanol production increases might eliminate the normal seasonal peak in gasoline prices. Lower demand in the US will do that, too. So my thinking for some time that oil prices will simply be flat this year in the $90-110 range is getting some support. That will cut a leg off the inflation-mongers.

Speaking of inflation-mongers, they say the Fed is printing money and pumping it out in a firehose and that will cause inflation to rise hugely. What are the facts ? The monetary base still shows very small increases - 1.2% year over year for this week. That's not even enough to accomodate the economic growth of last year. And M1 shows a fall from this week last year. So the Fed is NOT printing huge amounts of money. They really need to push more money into the monetary base. Maybe this week's reduction in the overnight rate will give them a means to do that.

Unemployment clains were up last week, but those were distorted from the layoffs caused by the strike of the GM supplier.

This spring I think we will see the core PCE fall back to the "comfort zone" and later this year the nominal year over year inflation will fall, too, as last year's oil price increases get dropped from the year over year comparisions.

Stagflation screeches are just armchair generals re-fighting the old wars of the 1970s. The "stag" will evaporate this summer or fall and the "flation", too.

European markets are closed today. I'm holding my positions - the largest are BAC, WB, JPM, C, GOOG, GE, DVN, CVX, and AAPL.

I saw two usages of "Panic of '08" over the weekend. Interesting. I guess that fits rather well - the Street did panic as their excess of many years of peddling garbage products caught up to them. Hmmm and I see GS will lay off up to 15% of its staff, too. That follows cuts at LEH and other firms. I'm not ready yet to throw in the towel on "Rich Man's Panic" yet, though.

I see Barron's has been reading my blog ;-) Here are two quotes from page M1.

"Other adages have clashed: 'Don't fight the Fed' girds the bulls, while 'Don't fight the tape' assures the bears. Could the successful defense of the former lows last week turn the tape positive and foster aphoristic harmony?"
...
"Striking Price
Financial Fandango
Defensive puts and battered bankers? There's no consensus"

So they are using $10 words now, copying me. Oh well, imitation is the sincerest form of flattery ;-)

PS: Sheesh Cramer reads this blog, too. I just saw him tell the SEC to bring back the uptick rule. Oh well ... imitation is ... ;-)

Words of the Day
"Aphorism" - noun [$10] - no flack, please, compare this word to "adage", "proverb", and "maxim" for the subtle differences in meaning. I did look them up to study them.
Aphorism means 1. a concise statement of principle ; 2. a terse formulation of a truth or sentiment.
Sentence: see above from Barron's for a use of the adjectival form.
Compare to adage which means a short maxim: proverb; to proverb which means a short, pithy and much used saying that expresses a well-known truth or fact, among other meanings; and to maxim which means a concise formulation of a fundamental principle or rule of conduct. Obviously there can be a lot of overlap in the usage of these words.

"Fandango" - noun [$10]
Fandango means 1a. a lively Spanish dance for two; 1b. the music for this; 2. nonsense, tomfoolery.
Sentence: The auction rate securites market was a fandango created by the Street to gain higher fees from greedy, rich investors. That market is now dead.