I mentioned last month about my sense that the economic indicators were starting to turn around. It was in no way a seismic shift, however companies and the government were beginning to beat the street’s expectation when it came to losses with the possible exception of the jobs report. Obviously, the government and the media focused on the bad news and ignored the signs that something positive might be starting to develop.

I feel it my civic duty to tell you what the main stream media and our newly elective leadership will not.

Folks, we had the retail sales report come out for January and it showed an INCREASE of one percent. In case you missed it…that was INcrease. With an IN.

That is most decidedly really good news and the media is choosing to ignore it while the government does its best to increase spending by one half of a billion dollars because they view the problem as job creation alone.

The lesson in the retail sales number is manna from heaven to me. I have consistently over my 25 year career in this industry preached that markets, left alone, are self correcting; and, that when the government gets involved, beaurocratic inertia eventually will gum up the works.

Here is further proof. How, do you think, in the midst of all of this horrible news including the loss of 3.6 million jobs, the publicized plight of Elkhart Indiana, a 789 billion dollar new stimulus package, that the retail sales number went UP? Shouldn’t Americans be withering in front of their flat screen televisions blowing raspberries at various and sundry American Idol contestants instead of spending money that they do not have? Logically, wouldn’t you think that?

Well, of course you would. Yet, the retail sales number went up. Why?

Because the prices are cheap. Welcome to capitalism 101. The sad reality in all of this is what transpired yesterday in Washington D.C. as Maxine Walters, Barney Frank, et al. took turns convincing America that the villains in all of this were 8 bank CEO’s. They took great delight in skewering them each in turn. I must tell you that it sickened me. It wasn’t just the politicians that sicken me. The CEO’s did nothing to turn up my admiration. They either apologized or promised to do better while working for no bonus.

Let’s be clear; bankers hold no fascination for me in that I don’t think it takes much gray matter to borrow a “valued customer’s” money at 1% and loan it back to that same “valued customer” at 5%, assuming that said “valued customer’s” credit rating is pristine and can afford a “fee” for the priviledge of having his own money loaned back to him. Nor is it difficult to imagine how easy it would be to abuse that system.

No, what sickened me was the idea that the problems of the American economy somehow could be traced to the frivolous use of a private jet or a corporate Las Vegas retreat. Neither one of those things caused the problem. I would point out that during the nineties when everything economically was hunkey-dorey, everyone seemed to have private planes and junkets.

What will turn this market around is the marketplace itself. When all of you deem it in your best interest to purchase a car, you will. And, you will find the financing. The same is true of a house. The good news is that I think we are close to reaching this juncture and the retail sales number (in a baby steps sort of way) supports my theory.

Here’s the real question. And I direct it to every CEO in the country.

What do we do when we do recover and the government refuses to take it’s hands out of your pockets and camera’s out of your boardrooms? How are you going to deal with those constraints and make a return for shareholders commensurate with the risk?

This is folly, tomfoolery…ballyhoo. And, it appears to be of the highest order. The only way that you can make money in the market, as a result, is to trade it, and I would suggest that those strategies, far from lowering risk, enhance it.

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