Dave’s Daily

What’s so good about putting up $7.4 trillion of taxpayer money to backstop stupid banks? Then it’s said Obama wants a $700 billion stimulus plan immediately. These amounts are beyond mind-numbing. But you know something; I’m no different than you–ticked off.

I wonder how much Citigroup stock Sandy Weill and Robert Rubin have sold over the past few years. Whatever misbegotten gains they’ve received should be turned over to taxpayers. But doing so would involve the Treasury recycling it back to Citigroup. Silly me!

Okay, all this isn’t my job. Let’s move to the markets where investors were overjoyed by the prospects of more bailouts that should lead to future inflation. Always remember when deflation presents itself politicians and policy makers will choose inflation over tough love every time.

Today’s bullish action is follow-through from Friday’s end-of-day options expiration/Geithner rally combined with the Citigroup bailout. Remember, stocks can inflate from reckless policy decisions and with markets deeply oversold a rally shouldn’t shock anyone.

Surprisingly, volume was just better than average. Breadth may have put in a positive 90/10 day which others will make a big deal about. But we can’t tell from the data below yet.

Yeah, who are they kidding? Everyone’s upset by this rush to bailout every crummy company. And, the amounts of money and stimulus are really overwhelming. Just when you think there isn’t any more cash in the vault up pop more proposals to spend more.

The Far Side has it right.

Some were wondering why we’re carrying so much cash. It’s days like the last two that serve to remind us how lethal these markets can be. Oversold bear market rallies are usually the most dramatic and the past day [plus the last hour on Friday] reminds us why we’re parked on the sidelines. It’s too soon to be long and still too oversold to be short. Eventually the time to invest will present itself if we remain patient and disciplined.

Let’s see who gets bailed out next.

Have a pleasant evening.