Best Month In the Market in 7 Years? Who Cares?

Repeat after me: The market is not the economy. Of course the market is doing well. The administration promised to put around 2 trillion more dollars into it in various forms.
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Repeat after me. The market is not the economy. The market is not the economy.

Of course the market is doing well. The administration promised to put around 2 trillion more dollars into it in various forms. Everyone now knows that the Obama administration will do whatever it takes to turn the market and financial sector around - even if that means trillions of dollars of risk for taxpayers.

Rule #1 of investing: when the government puts its full muscle behind something, ride it, don't get in the way.

What you want to watch now are:

Currency rates. Does the dollar go up or down. The government printing and borrowing tons of money may not look so good to foreign debtors. Or they may decide it's the only game in town.

The treasury market. Same thing. Are private investors and foreign governments willing to buy? Or will the Fed have to buy more treasuries?

Oil prices. All of this money is going to show up somewhere, and a lot of people are betting (literally) on it showing up in energy prices.

What's probably going to happen is a technical recovery that shakes apart based on unacceptable inflation before the recovery has reached a lot of people at the middle and bottom of the economy. Unless Geithner's plan fails in absolute rather than relative terms, in which case there isn't enough lube in the universe to make what will occur even tolerable, let alone pleasant.

In the meantime, remember, the market isn't the economy, and unless you're connected to the financial sector, odds are you aren't going to see much of all this money. The banks are being bailed out, not you.

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