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Recovery Canaries in the Economic Coal Mine

Hailing from four separate corners of the U.S. economy, Apple, Caterpillar, Starbucks, and Merck all beat the street. Throw in the banks and now you’re talking five corners. It’s bullish — 90 percent of the American workforce and rising business may be doing some spending and risk-taking after all. I like this story a lot. (Special hat tip to blogger Douglas McIntyre.)

Ben Bernankemay be too pessimistic. Perhaps it’s time for him to begin his liquidity-exit strategy — before year end. That is, if he has the wisdom to follow market-price indicators in order to prevent an inflationary bubble. Like Dr. Copper for example: The metal’s up 70 percent from the bottom. Are you watching, sir?

I’m staying with my “buy banks” call.

Look folks, toxic assets are still a problem. But don’t forget that zero interest rates and a steep yield curve mean that banks can, and will, and are, earning their way out of the non-performing assets problem. It’s not all about toxic assets. Think cash flows. Give it time. Banks look like they are still a great investment.

Despite solid, beat-the-street earnings from drug companies like Pfizer, Glaxo-Smith-Kline, Eli Lilly, and Merck, health care actually dropped yesterday after rallying pretty well in recent days. You know why health care dropped? Because President Obama is going to try to snatch victory from the jaws of nationalized health-care defeat.

The current debate over health care is of paramount importance. It is without a doubt the most pivotal issue facing this country’s free-market system right now. Obamacare would be a total disaster. This battle must be won in order to stave off the rising socialist tide in Washington.

Caveat emptor investors.

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