TGIF

Wow, what a week!

We couldn't have gotten the week off to a worse start  (well, we could, last week was actually worse) but we really pulled it out the last few days.  All we have to do today is hold the 12,200 line today and we can call it – well, not a success but NOT a failure!

David Fry maintains that this "rally" we're experiencing is a function of the Fed's arm of the fabled "Plunge Protection Team" as they injected tens of Billions of dollar in "repos" or short-term loans to the primary dealer network.  "Sometimes repos aren't even repaid, and when that happens money is created out of thin air. [Think money supply growth.]" Fry says "The primary dealers will use the money as they see fit, but may route much of it to their trading desks to play trade with."

So our government, which has no money, is giving your money to MS to bail out NEW using loans that may never be repaid (don't worry, they'll print more – that's the beauty of fiat monetary policy).  Surely the government can't just manufacture money and throw it at the markets – there must be some sort of law against it, right?

Asia finished up mixed with the Nikkei gaining half a point, bolstered (I am sure coincidentally) by C's massive offer for Nikko that we discussed yesterday as well as some good durable goods numbers out of Japan.  Super Banker Paulson left the Shanghai stock exchange in good shape, which was easy for him as they only lost $130Bn in value during that drop (Paulson probably had that much in just walking around money for the trip).

US markets, on the othe hand, lost a cool Trillion last week, pretty much the entire value of the China's stock market, which should give you some idea of how silly it is for us to react (or overreact, as the case may be)  to what goes on in Asia on a day-to-day basis.

So is this "rally" really real or has it been  manufactured to (as Cramer says) keep you in the market? 

Europe isn't so sure and their markets gave up a half point, despite good news out of Japan as EADS announced another $1Bn down the tubes this quarter. 

Back home I'm tempted to tell you how important the Jobs Report is as CNBC has been hammering the importance of  it for 3 straight days to the point where my children are now concerned about the outcome but somewhere in the back of my mind I remember that there's something wrong with this…  Ah, good thing I keep a blog – back in December I said:

"Europe is about as flat as flat can be ahead of our jobs report.  I am very distressed that so much weight is being given to a number that was revised last month by 22% in August and (I kid you not) 190% in September!  So we could get a payroll number of, say +80,000 jobs, but it could be revised in January to “actually” be +220,000 jobs or, possibly, -70,000 jobs – we just won’t know until the “real” number comes in.  Meanwhile the markets will react (or overreact) to whatever number we get as if they were carved on stone tablets at Mount Sinai!"

I know, some writers just rehash the same old dreck every quarter, I actually tell you when it's the same old dreck – it may not win me a Pulitzer but at least it's honest.

So for good or bad, the jobs number is just an excuse for the markets to do what it want to do, not the cause of it.  We are still looking for a confirmed breakout but now that we have a couple of indices above the 33% zone, we can start looking for a floor to form, hopefully giving us some support into the weekend:

Our buddy Dow seems to be in the most trouble while the Russel has the burden of leading us into the promised land of 33% retracement on the upside.  As of 7:35, the European indexes were all weak but holding roughly a 3% gain for the week, falling below 2.5% there would be a similar bad sign.  Use this chart to monitor our progress – we don't want ANY of our indices to cross over to the danger zone and we need to get all our canaries over the goal line so we can get on with our recovery..

Tom Brown of Bankstock.com makes the case for has a nice list of reasons for you not to worry and be happy about the sub-prime market.  It's nice to hear but let's remember that if all the bank stocks go bankrupt, there's not much point to his web site…   I especially like the fact in order for you to read this article you have to agree that "Bankstocks.com is provided to you solely for your own entertainment purposes."  I'm not saying he's not making valid points, I did a speculative "'mon back" on NEW myself yesterday but the key word is "speculative."

PG reaffirmed in-line guidance and they will be a good bellwether as we can gauge the market's reaction to what can only be called neutral news on a blue chip.  You would think that after a $4 (6%) pullback that people would be lining up to buy them as they assure investors they will hit targets but we will see...

Long-term massive demand destruction continues to be the elephant in the rooom for the oil patch as the EU reached a "broad agreement" to REQUIIRE 20% of their energy to come from renewable energy by 2020.  That's a 1.5% drop in demand PER YEAR for oil in the EU as a target.  Who's a winner here?  Our CCJ leaps as France won a key provision that will allow nuclear power to be included in the program to reduce greenhouse emissions, paving the way for a BOOM in nuclear energy.

Further East, China is offering tax breaks to companies that conform to energy conservation guidelines and is backing massive projects in solar energy, wind power and biofuel production according to Finance minister Jin Renquing (we are never going to be able to remember these names).  China also pledges to cut greenhouse emissions by 20% over the next 3 years, leaving the US as the only industrialized nation on Earth NOT doing something concrete about global warming.

“The government's restatement on energy saving during the National People's Congress does show its determination to realize the ambitious energy conservation target, though it will be very hard to achieve,'' Duncan Chan, an Hong Kong-based analyst with Everbright Securities Co., said by telephone today.   China will use “an energy saving evaluation and examination system for fixed-asset investment projects and make energy efficiency a mandatory criterion'' for their approval, Ma Kai, head of the National Development and Reform Commission said.  The country will “gradually and prudently'' reform the way resources are priced to reflect the scarcity and environmental cost of consuming resources, he said on March 7.

Wow they have a commission on energy reform?  I wonder what lobbyist pays for that?

"China plans to spend 1.5 trillion yuan by 2020 (I'm pretty sure that's a lot of money) to expand renewable energy use such as solar and wind power to 16 percent of total supply from 7 percent now. The country will subsidize biomass projects, especially those in bio-diesel and ethanol", the Ministry of Finance said.

A program of conservation and government sponsored development of alternative-fuel programs aimed at chopping another 1% per year of demand – somebody's got to stop these guys before they meet up with Al Gore!

Well like the song says, I'm proud to be an American because…  OK, well I'll get back to you on that one but let's just say that energy conservation efforts never really work, especially with 16% of the $1Bn budget (yes that's all we spend for energy conservation efforts in our $13,000,000,000,000 economy) being cut in the last budget.  See, and you thought they never cut anything…

We'll see if oil can break over $62 today but I say no because they only have until the 20th to get rid of 200Mb of crude that are on order for April (out of 244M) and May is already backed up with 213Mb (very high) with June offering no escape for traders to roll with 120Mb already on order at the NYMEX.  Combine that with Spring finally in the air and a deluge of backed up tanker traffic delivering oil through the Houston Shipping Channel this week and you have a recipie for a NYMEX melt-down by Wednesday.

I could be totally wrong here, especially with a strong jobs report indicating a resurgence in the US economy but I'm going to put it on the line and short oil into the weekend so I'm just praying for them to rally that sector today so we can jump in and SELLSELLSELL!

I'll be putting up a list of tasty candidates on the member site a little bit later.

We still want to keep gold away from $460 but a break below $450 would confirm a nightmare for crude below $62 as that would mean Rocky the Dollar is coming off the mat right after getting the mandatory 8-count.

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Fun things to distract yourself with when the market collapses:

In case you get bored, there's a really simple hack you can put into the Google maps URL to max out the resolution beyond what they "allow" in the browser.  Google has maintained that you cannot use their mapping system to catch boobies on the beach but I'll bet they start showing up now that this fix is being widely distributed.

Not only is big brother watching you, but he is taking pictures and showing them to all of his friends!  This poor guy was walking in the desert and got a feeling someone was looking at him – turns out they were!  I always tell my wife not to lay out topless but here she is, right on Google!  (sorry, but they don't seem to have that detail level at my house, yet!).