With South Carolina in his pocket and momentum clearly shifting, I wondered what the economy under a Gingrich administration might look like. With the caveat that anything is better than what we have, I find a lot of the stuff that Newt espouses is red meat for a free market guy like me. Having said that; here is what he says he would do:

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We’ve got a mixed bag today. Google reported and missed. Microsoft reported and missed. Intuitive Surgical reported and hit big. IBM reported and missed revenues while hitting profits. The end results; Google got nailed overnight; Microsoft went up; Intuitive Surgical went down big while IBM was up nicely.

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Let’s just take a quick look at some of the headlines and try to piece together precisely what is going on in the United States economy. Wells Fargo reports billions in quarterly profits beating estimates while Citigroup misses badly. France’s triple a credit rating goes by the boards and our own government lawmakers pushed new spending of $1 Trillion last year.  Iran continues to threaten the supply chain of oil through the straits of Hormuz and we continue to block the Keystone XL pipeline preferring to purchase our oil from Venezuela and Brazil rather than Canada.

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Friday the thirteenth, so far, stock market wise, is ugly. As I write this the market is down 140 points on the Dow and a like percentage in the other indices, and I think you can blame yesterday. The jobs report yesterday was lousy and yet the market the market went up a smidge. Why? The news was bad yesterday; not today; how come it went up yesterday and is down high today? I have no idea.

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As you might imagine, I read a tremendous amount of market research from varied sources. I read it all with a jaundiced eye since I principally believe that most of the folks who publish this stuff are trying to sell it. I see absolutely nothing wrong in that, but it does provide a filter and it should for you as well.

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Bill Gross, Pimco’s Chief Investment Officer, on CNBC today said that stock and bond returns will be below normal for years. Calling it the “new normal”, Gross could not be more wrong. Whenever I hear phrases like “the new normal, or it’s different this time”, I lick my chops. First of all, let’s get this on the table. Bill Gross does not know what the future holds; he especially doesn’t know squat about stocks. I am willing to concede that he has been one of the better bond mavens on the street, but he certainly did not cut his teeth on evaluating stocks. Here’s the deal. In my 25 years in the financial services industry, there have been countless gurus. They get anointed as “the way, the path, the light, the chosen one”. And then, when they are wrong, they get tossed aside only to emerge years later because the beast must be fed; more about that later.

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Let me tell you why I am even considering the issue.  Last week, Ben Bernanke, before Congress, said that the Federal Reserve was going to start taking some liquidity out of the system. First, they were going to stop the Fed’s 1.25 trillion dollar mortgage buying spree.  This will send interest rates higher. Secondly, the Fed chairman said that he hoped to accomplish his goals without triggering inflation. The reaction to that was higher Treasury yields and a stronger dollar.

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Rio Tinto, the Australian mining company, shamed itself by firing its top iron salesman to China along with three former Chinese colleagues moments after they were convicted by a Chinese court for bribery. Whether or not the men were guilty begs the question. The Chinese court system, long known, for being kangaroo like, did not disappoint in the severity of the punishment. Here’s what bothers me. Within hours of the men being sentenced, Tom Albanese, chief executive of the Anglo-Australian miner, said the case would not jeopardize relations with China, the group’s biggest customer. No kidding. Anything to keep the orders flowing.

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Your taxes will go up. The level of your medical care will go down. The time that you will have to wait for care will go up, and the national growth rate will slow significantly. All of these maladies we can plant at the doorstep of Obamacare and you heard it here. We will not have to wait until November to issue our protest at the ballot box. We can start screaming now. Let’s start with this simple fact. In a time when the United States budget deficit stands at 1.4 to 1.7 trillion dollars depending on who you believe, the Congress of the United States just passed another multi-trillion dollar entitlement insuring the liberals dreams of a cradle to grave government subsidy. Huzzah!

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So, here’s the deal;  one year ago, Mark Hanes of CNBC fame said that he thought the market may have hit a bottom. One year later; it has proven to be prophetic.  The market is up 60 percent from last year’s bottom and Hane’s is taking full credit for it. CNBC shamelessly is following suit. All morning long, they have done nothing but extol Mark Hane’s call of the market bottom.  Let me share with you just one exchange I heard this morning. Hanes was talking to another market analyst who said, “Hey, Mark, I called the market bottom two weeks after you did, so I did pretty well,” to which Haines said, “ I called it within two minutes.” And, that is when I wanted to throw up.

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The consumer confidence number came out this morning showing a huge increase. Just two months ago, the number was falling faster than Jay Leno’s tenure on the Tonight Show. It is now at the highest levels in 8 months and according to the consumer confidence board, the public believes that the worst is behind us.

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Here’s the fact; all of you are being lied to on a daily basis.

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I have a significant problem with the Treasury bailout of the financial system’s toxic assets announced Monday by Treasury Secretary Geitner. The problem is that the stock market went up almost 500 points on the Dow and is now up 21% in a couple of weeks. What’s the danger, you ask? Good question. The public is going to believe that the solution to the stock market decline was the government. They are going to believe that the Treasury rode in on a white horse, swooped up the damsel in distress and saved her from the fire breathing dragon.

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The stock market has seen a 15% advance in a week. Make no mistake that it will retreat from that level because the traders are in control. These are the professional guys who buy a billion shares, get fifty cents a share and pocket 500 million. If all of that sounds foreign to you, it should. These are mutual fund managers, money managers, hedge fund guys, etc. They are not Joe and Jane Six Pack struggling to make the mortgage payment.

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John Stewart took on Jim Kramer last night on “The Daily Show”, and evidently skewered him. While I applaud the taking down of Kramer as an “entertainer” and not a “journalist”, I think it is disingenuous for Stewart to suggest that Kramer is somehow America’s financial advisor. Stewart kept suggesting that he did not need Kramer to entertain him; that he needed Kramer to advise him. Well, then open a brokerage account with Jim Kramer.

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The ADP report issued today before the official jobs report showed another loss of almost 700,000 jobs last month. This will bring the total in the last 12 months to a staggering 4,000,000 jobs lost. The question becomes one of turning around the Titanic and while most agree it is possible, all agree it will take a long, long time. The stock market is up following the jobs report and one has to ask the question how it can be up given such a bleak economic report? It’s a good question, and one that allows for another stock market 101 lesson.

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I am starting to field more and more phone calls from clients wondering whether they should sell their stock market portfolios in order to go into fixed income. Being down 53% on the Dow and S&P 500 indices, I am loath to do that especially if the investors are under 50 years of age. If we professionals have served our clients rightly (and I know that my people have), then as folks get older, their percentage in growth stocks decreases while their percentage in fixed income increases. But, make no mistake, whether you are 2 years from retiring or 50, moving to cash comes at a cost…and that cost is substantially augmented when the move is made out of fear.

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In a continuing effort to be a rational economic voice in a world gone mad, today you need to hear about the ability to allow your intelligence to trump your fear.

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Five years ago when I left the wirehouse world to open Triune Capital Advisors, I warned that the financial services industry was a cesspool and that over time, the truth would come out about some of the things that I saw that made me uncomfortable. I was vilified for it when I said it in a radio commentary. Indeed, one CEO of a very large bank called to tell me that, “he had lost all respect for me.” Well, vindication is no comfort. I hate being right about this. The industry, while smaller, is still a cesspool and the daily headlines serve to paint everybody in our industry with the same evil brush. The individuals in the industry, with notable exceptions, are not to blame. This is a systemic problem. The latest headlines featuring Alan Stanford, Bernie Madoff, and UBS Swiss bank account holders are indicative of what has transpired in the quest for greed’s gain.

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I mean no disrespect to the financial minister of Japan who apparently felt so overwhelmed by the global financial crisis, he drowned his sorrows in a bucket of sake. The only problem is he then appeared in that altered state on the world stage on Saturday and then resigned in disgrace Monday morning. I can guess how he feels and I am not going to demean this obviously all too human reaction. It is scary, and if I were the finance minister of a G-7 nation and I had no answers, I might be tempted to belly up to the bar myself.

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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.

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Over the last 18 months, there has been a concerted effort to polarize Wall Street and Main Street. Turn on the television to any business show and see if you don’t see somebody take a shot at the “fat cats” on Wall Street. It could be Bernie Madoff or it could be a CEO who earned a ton in stock options. It doesn’t matter. There is a perception out there that our current struggle could be solved if we could just get “them” to stop hosing “us.” Even the President on Monday night went out of his way to position Elkhart, Indiana as the hometown for all of “us.”

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The stimulus proposal being bandied about in Congress is a done deal. The question now is whether or not it solves our economic malaise.

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There are over 8,500 banks in the United States.

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What precisely do you think is the significance of a 7.6% unemployment rate?

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With the economic news debilitating and our Presidential appointees backstroking; with trillions of dollars in deficits resulting in trillions of dollars in cash on the sidelines; with unemployment rising and profits tumbling faster than Rod Blogoyevich’s reputation, the nation is scared.

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The economic indicators are slowly starting to trend in the right direction. More and more, I am starting to see numbers that are described as “lower than expectations.” For example, this morning, the personal income report came out and demonstrating a downward move of .6%, and that was lower than the 1.0% the street was expecting. Now, this may not seem like such a big deal, but turning around the Titanic took some doing, and so will turning around this economy. What we have to get past is the notion that the economy will turn once the stimulus package gets put to bed.

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I frequently wonder why most people in the economic world are afraid to point out the obvious. Certain things on the face of it are patently absurd. Was anybody as amused as I was to see Vladmir Putin and Wen Jiabao on the front page of the Wall Street Journal today waxing philosophic about what has caused the world’s economic problems?

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The world is convening in Davos, Switzerland for the annual economic conference. If the opening speeches and panel discussions are any indication, uplifting is not a word I would use to describe the tenor of the outlook. For me, it has always been difficult to prognosticate what is going to happen by what has recently happened. It fits into my “nobody knows nothing” mantra.

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There is some good news starting to percolate on the economic front. You will not hear much about it given the media’s desire to scare you out of your skivvies.

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It is a mathematical fact…somebody’s lying.

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To paraphrase Lyndon Johnson: “Doing the right thing is easy; knowing what the right thing is? That’s hard.”

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Do you remember the good cop, bad cop scenarios played out in countless Hollywood dramas?

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There was a line drawn in the sand yesterday during Barack Obama’s inaugural address. First, let me say that I thought it was a terrific speech. It was uplifting and hopeful, and I am certain that Americans feel better about themselves this morning. The problem that I have is ideological because I think President Obama said something in his address that economically was dead wrong. He said, “the question that we ask today is not whether our government is too big or too small, but whether it works.” Great soundbite, but it begs the question. Contrast that with Reagan’s inaugural address in which he stated that big government is not the answer to our problems, but rather big government is the problem.

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One needs to pause to at least recognize the majesty of the moment. There is no question that the United States of America, when it comes to the transition of power, understands democracy. Yesterday, George W. Bush, was the leader of the free world and today, the power transfers to Barack Obama; and, it will be seamless. Like most Americans, I will be swept up in the wave of patriotism as I watch the oath of office delivered, and I clearly want to send my very best wishes to our new President. I also feel like I need to wish him “good luck.” For those of you waiting for the obligatory, “he’s going to need it,” that is too silly for me and demeans the enormity of his task.

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