Socialist's bailout of the EU State of Greece may be pretext for socialist Obama bailout of California.

Bailing out Greece is a moral hazard unless Greece is required to pay back the loans with interest. It is effectively a bailout of overpaid union labor and indigent government pseudo-workers who use their body heat to help keep room temperatures higher in winter and who are frequently absent in the summer to help reduce air conditioning costs. I had a high school friend who became a NY State employee in Albany. He explained to me how they handled NY State citizen problems. He said he put the problem letter in a drawer for two months in case it was traced to him. That never happened because they were so disorganized so he always threw out the letters after two months. He was the most efficient worker in the office and had high ratings because he socialized with other state employees all day to keep morale high.

World Outlook

China resumes belt tightening to head off a rapid inflation in food prices.

Britain is convincing the US FED to aim for a 4% inflation rate instead of the 2% rate used by Greenspan. Their idea is to give more credit tightening room and thus avoid the Japanese problem of repeated and prolonged recessions.

Week of Market Reports:
We expect more evidence this week that the economic lows are now behind us.

Date Time (ET) Statistic For Actual Forecast Expect Prior Revised From
Feb 9 10:00 AM Wholesl Inven Dec - -0.8 -0.3% 0.5% 1.6% 1.5%
Wholesale inventories unexpectedly fell in December, prompting analysts to suggest the economy may have grown by more than estimated in the fourth quarter.

Inventories decreased 0.8% to $383.57 billion. Wall Street had expected a 0.5% increase in December wholesale inventories. Wholesale sales climbed by 0.8%.

Feb 10 8:30 AM Trade Balance Dec - -$40.2 -$32.0B -$35.5B -$36.4B
The trade deficit in the U.S. unexpectedly widened in December, reflecting a jump in petroleum imports that swamped an eighth consecutive gain in exports. The gap widened to $40.2 billion during the month, the biggest in a year, from $36.4 billion in November,

Feb 11 8:30 AM Initial Claims 02/06 440K 475k 465k 483k 480k
Initial claims were down this week.
Feb 11 8:30 AM Contin Claims 1/30 - 4538K 4550k 4590k 4617k 4602k
Seventy weeks of unemployment compensation may be increased to 99 weeks to ease the contraction but that will raise the recorded unemployment rate because the number will be truthful. Throwing people off of unemployment can make homelessness and credit defaults worse.

Feb 12 8:30 AM Retail Sales Jan 0.5% -0.1% 0.3% -0.1% -0.3%
Feb 12 8:30 AM Retal Sal ex-auto Jan 0.6% -0.3% 0.5% -0.2%
Feb 12 10:00 AM Busins Inven Dec -0.2% 0.3% 0.4%
Feb 12 9:55 AM Mich Sentiment Feb 75.0 75.0 74.4


Market forces Feb 12, 2010
When the market rises close to the next high (in 2 to 4 months) it will likely be critical time to take profits because FED tightening will likely be occurring. After the next high point the subsequent decline will likely break the old October 30 lows and challenge even the July 2009 low.

Our corrected NYSE cash flow index gave its Head & Shoulder neck breakdown sell signal on Jan 29 when the NYSE (corrected for trading volume) broke through the neckline of a head and shoulders formation and it plunged about 3% below. But that signal has a long lead time which allows us to know hat is likely two or three months in advance. It is too early to sell because in two or three months our leading indicator could become positive again. But right now it alerts us to be prepared to sell out at the next high, which is probably going to be close to the 2009 high, and the high for 2010. We expect the coming rally to lift the averages back close to the previous high. That high will again mislead most investors into thinking it is safe to buy stocks just when we intend to be taking profits.

Asian markets were up over night; Shanghai up 1.1%, Hong Kong down 0.1%, India closed, and Japan up 1.3%.

European markets are mixed in the range from -0.2% to +0.2% this morning about half way through their day.

Today US pre-market futures are down about -0.4% at 8:30 AM EST.