Wall Street Journal reported that evidence mounts for strong recovery. The following is quoted from Wall Street Journal.

“There’s a growing risk that we’re underestimating the strength of the recovery,” said Stephen Stanley, chief economist at Pierpont Securities, noting that deep recessions tend to be followed by steeper recoveries. “If the economy pops, it’s going to be faster than anyone is forecasting.”

That’s pretty encouraging! The job market is still dull, but many companies can’t find qualified people to fill positions. If the recovery is really on the way, all prospective home buyers, especially in San Francisco bay area, will need to wait for long time before their dream of owning homes. Home prices are already creeping up and out of reach for many buyers. If the low interest rates are here to stay despite of strong recovery, we may witness another real estate bubble.

Today crude oil futures hit a new 17 month high, closing at $86.75. It has been a whirlwind for crude oil futures over the last couple of years. In the summer of 2008, oil prices traded as high as $147 a barrel and gasoline prices at the pump topped $4 per gallon. As the economy went into the tank in late 2008 and early 2009 the price of crude oil and gasoline dropped quickly. Crude oil futures plunged below $45 a barrel and gasoline went slightly below $2 per gallon. Fast forward to today, and crude oil prices have doubled from their low and gasoline prices are on the rise.

The writing is on the wall, gasoline prices are certainly going to cross $3 per gallon soon. The extra money you had in your budget because of the drop in gasoline prices is going to go away, and once again travel expenses are going to start causing many consumers headaches in the next few weeks and months. The biggest negative about this news is that summer driving season is coming soon, and prices are almost assured to be higher then, which will hurt vacation spending as well. It is all a vicious cycle that has the potential to slow down the economic rebound that appears to be underway.

As a wise consumer, I strongly suggest you start finding places to cut your expenses little by little to account for the higher costs of travel that are coming soon. Find areas of your budget that you can cut back ever so slightly to make a small differences. Those small differences will quickly add up to a significant amount over time. The sooner you start making changes in your spending habits, the better prepared you will be when these prices continue to rise in the months ahead. Preparation is a huge key to financial success, so start getting ready today!

The stock market is rising nicely today after the February non farm payrolls report showed that the economy lost just 36,000 jobs in February, much less than the 70,000 or so analysts had expected to be lost. Severe weather throughout February gave the month a very bad backdrop, especially for groups such as retailers and those most exposed to the consumer. The weather would also hurt construction hiring since many jobs were not able to be completed due to the inclement weather during the month. December’s number was revised to just 109,000 jobs lost, from an initial estimate of 150,000. In January there were 26,000 jobs lost. The unemployment rate held steady at 9.7%.

The breakdown of jobs gained or lost does indeed show the hardest hit area was construction, which shed 62,000 in the month of February. Unemployment in the construction is estimated at a stunning 27.1%. Retail employment held steady after gaining 40,000 jobs in January. On the encouraging side of things, 47,500 temporary workers were added in the month. Private business services, often seen as a barometer for the jobs market overall, added 51,000 jobs in the month of February.

Clearly the jobs market is on the mend from where it was several months ago. Right now we are talking about nearly break-even jobs gained and lost, which is a big improvement over 600,000 jobs being lost per month. There definitely needs to be more improvement and it will be interesting to see what the spring brings for the job market in the United States. Temporary workers being picked up tells me that employers are starting to edge back onto the side of hiring, but they are doing so cautiously. March’s employment report has a chance to be our first month of gains in quite some time, so stay tuned and see if the economy can get back on the path of creating jobs!

Mergers and acquisition activity, often called M&A, can be a great sign of the economic times. When the economy is in the dumps companies don’t want to open up their books and spend, so activity is slow. As companies become more confident about the economic environment they usually start to look for business opportunities that can help them grow. Both yesterday and today there has been a huge increase in the M&A activity on Wall Street, and there is no doubt that investors are taking notice.

Yesterday it was the Prudential and AIG deal that took center stage and for good reason. Prudential purchased the Asian operations of AIG for a whopping $35.5 billion. That certainly doesn’t sound like something that a company would do when they believe the global economy is in shambles. The simple fact that AIG was involved in this transaction also lifted the spirit of investors, since AIG is one of the main culprits for this financial crisis that has occurred in the past couple of years.

Today we have word that the fertilizer industry is ripe for M&A activity between major players. This is another space where companies with cash on hand appear willing to wheel and deal in an improved economic environment.

As individual investors the increase in mergers and acquisitions should definitely encourage you. Large companies that are stocked full of cash are often very careful with this cash, but when they start opening up their balance sheet and making deals, it is a true sign of increased optimism. If large companies with a stockpile of cash are more optimistic about the future of the economy then that makes me feel more confident about the direction we may be heading.

As more cash is spent and businesses take a leap of faith, the end result should be a positive one for the stock market and consumers as a whole!

Little bit of good news is pushing up the market today. Commerce Department said that the personal income has gone up six straight months and spending has increased four straight times. Consumers’ personal spending rose by 0.5 percent in January, slightly better than expected. But incomes edged up only 0.1 percent, significantly lower than the 0.4 percent gain that economists had expected. Consumer spending is closely watched because it accounts for 70 percent of total economic activity.

On the inflation side core price index (CPI) for personal consumption expenditures, which excludes volatile food and energy, rose 1.4% compared to January 2009. CPI is slightly decreased compared to December last year. It was 1.5% in December 2009. This means that prices are in check and inflation is not a big danger yet.

The stock market is trading much lower today, and the NASDAQ is leading the chargeto the downside. In a market that has become much more jittery over the past week, the technology stocks have been the biggest disappointment. No doubt the expectations were high for them coming into this earnings season, and for the most part they have failed to meet those high expectations. Today the major technology names that disappointed on the corporate earnings front were Motorola and Qualcomm. Both of these companies are in the mobile handset market and both had a pretty bleak outlook. Qualcomm missed their revenue number for this quarter, and is getting crushed by about 13% today.

Apple shares are also trading lower by about 4% on big volume today as the iPad has received some less than stellar reviews from some major names. In fact, a full article of the iPad flawshas circulated today. The market is starting to wonder if the release of the iPad is a little bit less of a boost to Apple than they initially thought.

Maybe investors just had hopes that were simply too high for the tech sector, but the NASDAQ is definitely starting to correct itself, losing 4% in the last 5 days. The overall market continues to be pulled down by uncertainty in Washington as well as around the world. There is no doubt that the market hates uncertainty, and the last few days is a great example of that. Right now investors are looking to find a clearer picture of what may be in the offing for the economy as well as the market. As I have said numerous times before the biggest deal right now is making sure the jobs picture improves so that the consumer gets healthier. It doesn’t have to be a perfect outlook to help the market right now, but we do need to get some clarity.

We have a tough week ahead. Last week was tough too, no one would have expected it. Goldman Sachs delivered great earnings, but still was killed by the market because President’s sweeping new plans. On top of it, there was a doubt about whether Fed Chairman Bernanke will be nominated for the second term. There were lots of concerns about China tightening banks’ lending rules.

The broad-based selloff pushed Dow Jones Industrial Average down 552.45 points during the past three trading days. Friday’s decline left the Dow still up 55% from its low hit on March 9 last year, but Dow is down for the current year. It appears that January effect is fading away. Dow Jones suffered its third consecutive triple-digit decline, down 216.90, to 10172.98

In the week ahead, Senate will probably vote on Bernanke’s confirmation. If he is not confirmed for second term, the market is going to fall bad. We will get data about new home sales, initial jobless claims and Chicago PMI on Friday.

As always trade wisely. Know your risk tolerance and keep those stop-losses tight.

President Obama announced a sweeping new plan today to curb the size of banks in what he called an effort to get rid of the possibility of a bank being “t00 big to fail.” Basically the idea behind it is to limit the amount of risk a bank can take on, and leave open the possibility of government authority blocking actions they deem as too risky.

Probably those most affected by this are big investment banks like Goldman Sachs. These kind of banks will likely now have to consider letting go of their traditional commercial banking area in order to be able to keep doing things such as proprietary trading of mortgage securities. The White House believes that separating the risk takers from the general commercial banks would be a good move for the entire financial system.

This bank limit that Barack Obama announced today is part of a broader system of bank reform plan that is in the works right now. The recent announcement of a bank tax on the TARP money that is being paid back was met with skepticism and from many and the same thing is happening in this case as well.

Today the stock market is plunging, in large part because of the bank limit rules that were announced today. Investors worry that consolidation of financials will no longer be possible because of the cap that has been put on their activity and their deposit levels.

I believe that the President is seeking to avoid a financial collapse as there was last year, but I do also believe he needs to be careful about getting government too involved in the institutions. Obviously there needed to be more rules than there were a year ago, so hopefully these will help. There is a very fine line that must be walked. The government must set rules that prevent future collapses while still encouraging growth among these companies. Only time will tell how this proposal will work for the industry.

Today’s article on TheStreet.com regarding the strongest banks in the United States hoarding cash is an interesting one. It seems that many banks, especially community-based banks, are being ultra-conservative now because of the financial crisis from the recession in 2008 and 2009. It is certainly understandable since they want to play it safe, but it has to make you wonder what that means for the overall economy.

Some of the top banks in communities across the country now have a tier one leverage ratio above 20, which is four times the amount that makes them an A+ for safety according to TheStreet.com’s formula. The risk based capital ratio at many of these same banks is up above 40, also four times the necessary level to make them an A+ according to the formula.

What does all of this mean anyways? It means that banks are being extra careful with their money and not wanting to take chances on loans and the possibility of charge-offs. For banks that aren’t involved in lending in their communities this is great, but those who are heavy lenders are probably going too much to the other side. The truth is I believe banks need to find a happy medium of not being too aggressive with their balance sheet, but also not just simply buttoning it up and making it difficult for small business owners to get on their feet.

Over time it is imperative that lending get back to a normal level and the people who need loans be able to access them. At the same time the system needs to be limited so that a bank doesn’t over extend their assets and take the chance of failure. For right now hoarding cash has probably been a good idea, but we will need lending to commence again to have a full-fledged economic recovery.

Today the stock market is doing exactly what I would expect, sitting back and waiting to see what comes out of the big employment number tomorrow morning. I think wise investors should do exactly what the market is telling you to do, wait and see exactly what the employment picture shows. This goes for tomorrow’s report, which will let us know about December, as well as the reports in the coming months that will show us the picture in early 2010. As I have stated to readers of this blog many times in the past, I simply do not believe in the notion of a “jobless recovery.” I truly believe that any real recovery must be accompanied by a strengthening job market so that the consumer can feel more confident about their current situation and future prospects.

What kinds of things should you look for in the employment data to see if the trends are starting to look better or not? Look at the beaten down sectors such as manufacturing and see if there are any signs of life. Also, take a look at things like average wages and see if they are beginning to pick up at all. Sometimes the top line number of 10% unemployment rate or whatever it may be gets a little too much recognition in my opinion, since that doesn’t account for those who have stopped looking for a position. The trends have gone in a solid direction with smaller job losses of late, but we will definitely need to see some sectors other than the government and healthcare adding jobs for the market to continue its recent climb.

The bottom line is every single jobs number will be vitally important to the market for the next few months. As an informed investor I strongly suggest you start parsing through the numbers and not just looking at the top line!