U.S. Great Depression & Profits from HOV and GHM

Former Czech Prime Minister and European Union President Topolanek called the U.S. economic stimulus plan "a road to Hell." He claims the Fed, Treasury and Administration of repeating the mistakes of the 1930s that sent the United States into the Great Depression.  
Also attacked were the stimulus bill’s supposedly "protectionist" policies. 

Hovnanian and Graham

Yesterday, I suggested that this rally was unlikely to retrace much ground and give buyers an attractive entry point. I went on to recommend a position in homebuilder Hovnanian Enterprises (NYSE:HOV). 
Well, today stocks are pushing higher and Hovnanian is up 20% from yesterday’s closing price of $1.52.

Economists vs. Strategists

497? What, the Dow Industrials can’t crack 500 points? 
I’m kidding, of course. That was some impressive rally. The biggest one-day rally since October 28, 2008. And on the heels of Geithner’s re-hashing of Paulson’s bank bailout plan, too. 

A Trillion Here, A Trillion There

A trillion here, a trillion there. Pretty soon, we’re talking about real money. Treasury Secretary Geithner will unveil his plan to rid banks of their toxic assets today. And it’s expected to cost another $1 trillion dollars.  
I’m sure we’re all thrilled to learn that we’ll get yet another new government agency. It’s called the Public-Private Investment Program. It’s charged with removing up to $1 trillion in toxic assets from banks’ balance sheets. 

Oil and Recovery

Oil prices have moved over $50 a barrel. There are a few factors at work here. OPEC’s cut production. Of course, that’s been ongoing, and OPEC’s moves have done little to prop up prices as demand around the globe falls.

Inflation Coming?

Yesterday, the FOMC voted unanimously to buy over $1 trillion dollars in U.S. Treasury bills, corporate bonds, mortgages and consumer debt.  
Chief economist at Bank of New York Mellon Corp. called it a "Rambo Fed" move in a Bloomberg interview. He said "This is a very powerful and aggressive move…"

The Good Times Roll?

Investors let the good times roll again yesterday, pushing the Dow Industrials up over 7,400. A surprise jump in homebuilding activity spurred continued enthusiasm yesterday.  
But underlying the recent jump in the market is the hope the economy may have actually bottomed. Unfortunately, there’s no way to know. The Obama administration has been doing its best to push that message that things are getting better. And some in the banking sector are jumping on board. Let’s not forget that these players are "talking their book." Their opinions reflect what would be the best outcome for their own business, but also the business of America.

S&P 500 Support

I have never seen a company more determined to make itself universally reviled than AIG. It truly boggles the mind that anyone at AIG, especially those in the financial products division that lost $62 billion on credit default swaps in the fourth quarter alone, could think they should receive a bonus. 
I don’t care what the contract says – if you’re party to losing $62 billion in a three-month span, you get no reward. Sorry. And if you even have to ask if bonuses can be paid with bailout money that’s keeping your business going, your moral compass is seriously out of whack.

Bernanke Beats the Drum

Fed Chief Ben Bernanke keeps beating the "Recovery in 2009" drum. It seems he’s confident that the measures taken by the Fed, Treasury and Administration will free up the banking sector and get money moving again.

The Rally

Stocks made another impressive move higher on Thursday. I think we’re all enjoying seeing a little upside for stock prices. There is a light at the end of the tunnel. But I don’t want us to lose sight of the near certainty that at least one of the lights we’ll see in the darkness will be the proverbial oncoming train. 
Market bottoms can be difficult events to get a handle on. Bullish and bearish sentiment is in equilibrium. As individual investors, we might feel that things aren’t getting any worse, but they aren’t getting better, either. Sell-offs appear to clearly be buying opportunities (like when the Dow dropped to 6,440), but any upside is immediately suspect because there’s no real improvement to the fundamental picture.