A Spoonful of confidence is just what the market needed and boy did we get our share last week. The markets had their best showing since last November. Three of the biggest banks in the country, Citigroup, Bank of America and J.P. Morgan, reported real operating profit for the first two months of the year. Retail sales were better than expected, while inventories on the shelves continue to be cleared. Metal prices, the basic ingredients to producing a multitude of manufactured goods, are on the rise while the price of oil, the most closely watched commodity of all, continues its own rise in price. There's more; the preliminary reading of the University of Michigan's survey of consumer confidence index increased from February to March.
Are you tired of the good news? I'm not; let's look at some more. Bernie Madoff pleaded guilty to the largest Ponzi scheme on record and will more then likely spend the rest of his life in jail. The majority of Stanford Financial Group's operations were shut down while our regulators continue to try to find a few dollars for their once trusting clients. In addition, the $Billions of dollars frozen in the Auction Rate Securities mess has a surprising new champion, a Chief Executive Officer of a major broker dealer.
Thomas James is the CEO of Raymond James Financial, whose customers hold about $900 million worth of auction rate securities, and has threatened to sue PIMCO of Newport Beach, California, who is a major issuer of these securities. This is what he said at their national sales convention last week to PIMCO. "You don't understand. We distributed for you guys, and you haven't lived up to your obligations", and "You said these things were going to be liquid. There was going to be a market. You're not doing anything about that. You just can't do that".
Bernie Madoff was able to take money from thousands of individuals for years, by mixing investment advice with the brokerage business. Tom James is openly telling the world that licensed brokers and financial advisors are salesmen of other peoples' expertise and should not be held accountable as investment advisors.
Finally, President Barack Obama said on Friday he was "confident" the country would get through this crisis and added, "We are laying a foundation for what I'm calling a post bubble economic growth that won't repeat the risks that led to the current crisis".
Confidence in the future is a necessity in restoring stock prices and economic growth. The prosecution of Mr. Madoff and Stanford by our government regulators, removing the confusion on the difference between the salesmen of investments, from the managers and fiduciary advisors of investments, and finally President Obama's optimistic proclamation for the future, were three major steps towards this restoration.
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