3/29 Daily Commentary

I am long the stock market. Confirmation will come when June futures exceed 1171.,50, hopefully tonight.
Dollar peaked short-term, so until dollar index declines to 80 then commodities will advance.  This will put a tailwind behind the stock market.  See the 10:00 post for more. I1 peak on 4/2 on Good Friday means I will go short Monday morning, hopefully on a rally.  Prior to this date any decline below DJI 10,720 will force me to go short.  I do not expect this to happen.

Jobs report Friday will be a positive number, expecting 200,000.  Of these 100,000 will be census workers.  This will not diminish the buzz.  Past stimulus means current economic uptick.  The stock market sniffs out future sources of liquidity.  Whether that liquidity is public sector or private sector, short-term or secular, it provides the tailwind or headwind for the stock market.  Where will future liquidity come from?

Ultimately, liquidity waxes and wanes with human psychology, the propensity to risk capital on future outcomes.  On the corporate side, investment in plant and equipment causes liquidity to increase as this capital multiplies through the economy.  The bricks and mortar side of investment is pretty much gone in the U.S.  The cost disadvantages of building plant and paying workers and government prohibits the decision to locate new plant in this country.  This has become even more prevalent given recent government actions to increase the costs of workers and taxes going forward.
How about tech spending?  I spent a lifetime in Information Technology.   The payoff of increased tech investment has been declining for a decade.  The liquidity boost in the economy is in the multiplier, not the initial investment.  The lower the bang for the buck then the lower the multiplier. 
How about the consumer side?  The fervent hope of Treasury and Fed is  that by supporting mortgage markets they can cause citizens to take the mortgages off of their books.  Even with the trillions thrown in and a year and a half to gain traction, these investments are still underwater. Boomers are not going to borrow, even those that would pass credit muster, because they are at the lif-cycle stage where reducing debt is a prerequisite for saving  for retirement.  Other segments of society are either bad credits or in debt-reduction mode for the next several years.
On the commercial side, by buying CMBS they hope to minimize the decline not only in the CMBS market but in the prices of properties themselves.  Again, it has been a year and a half and the commercial crisis is now hitting a broad swath of financial institutions.  By not allowing the commercial market to clear the government is keeping low-priced properties off the market, which could increase the efficiency of potential leasees/purchasers.  Government is committed to preventing American business from coming back to international competitive advantage.