Farrell: Obama vs. Schumer

President Obama says let's delay calling China a currency manipulator and get them to the table to talk about that issue and the potential of having China join the UN in applying some sanctions against Iran's nuclear program.

It sounds to me like high-level diplomacy the way it's supposed to work. Give a bit and maybe get a bit.

New York's Senator Charles Schumer, the third most senior Democratic Senator, says the heck with that and is going ahead with trying to force the government's hand on the China currency controversy. Being apolitical I report without prejudice the most dangerous place to be in the US is between Schumer and a TV camera. But that is apolitical and completely non-judgmental. Heck, Chuck would probably agree. I would go with the President on this one.

In other far-off shores, the Greek government is going to do a "road" show in the US to try and convince American investors to buy its bonds.

Good luck.

Goldman tried to get an Asian road show going a while ago and the deep-pocketed Chinese said, in effect, if Greek debt isn't good enough for its fellow Euro zone members, why is it supposed to be good for us. No way does this deal get sold in the US. My trading desk pals at Soleil, Joe Matura and Joel Dnistrian (Joe and Joel to their friends) told me with great exactitude the 10-year Greek bond was trading at 6.99% mid-afternoon on Tuesday. The last 10-year deal the Greek Finance Ministry did a few weeks ago was at a 6% yield so the market has worsened considerably.

A week or so ago they did a seven-year bond deal and Asian investors bought only 5% of the offering.

Over 40% was placed with investors within Greece and that can't be too deep a pool to dive into again. US investors were not seen at all. 21 billion in euro debt is due in April and May and the Hellenic Republic might consider the advice expressed in London's Daily Telegraph which is to accept the reality and default. In fact the paper opined the IMF should be brought in now to handle the default. Not to go down without a fight, the Greek deputy Prime Minister said the problems are going to spread and Portugal will be the next victim. It's always a good idea to point fingers elsewhere to get out of the spotlight.

Argentina must have felt slighted by all the attention being paid to Greece so the Kirchner government did a most unusual thing and tapped the country's reserves to pay debt. The Argentineans have been pariahs in the international debt markets since defaulting about eight years ago. This will not get them back into the market. Cynics say the money will essentially be used to pay for public works projects to pave the way for Mr. Kirchner to run for the Presidency and succeed Mrs. Kirshner. Reminds you of Juan and Evita Peron of the 1950's. And if you don't remember them rent the movie "Evita" starring Madonna and Antonio Banderas ("Don't cry for me Argentina"). The government says using the reserves saves the high interest costs the market would charge.

If you think interest would be high now, wait till the reserves are exhausted!

Illinois doesn't want to be left out of the running for most inept government so they will come to market despite high rates to try to paper over a deficit of $13 billion. How can a state the size of Illinois run a $13 billion deficit? Illinois is the home of famed Senator Everett Dirksen who once uttered the famous line "A billion here, a billion there, pretty soon you're talking about real money." Maybe more importantly, Dirksen (1896-1969) championed the Civil Rights Act of 1964 and wrote, "Victor Hugo wrote in his diary substantially this sentiment, 'Stronger than all the armies is an idea whose time has come.' The time has come for equality of opportunity in sharing of government, in education, and in employment. It must not be stayed or denied." Illinois should be ashamed.

Thanks to my young associate, more accurately Chris Virelli's young associate, Jay Myers, I revisited earnings estimates for 2011. Now when I say young, I really mean young. You could double Chris' age and not get mine, and I only wish I was as skilled as Chris. But you could fourple Jay's age and still not get mine, so we are talking young tigers at Soleil. I go on sales calls with these guys and realize I was making calls ten years before they were born! (I'm not sure how I feel about that.) Anyway, estimates for 2011 have crept up north of $90 for the S&P 500 index. They are still around $78 or so for 2010. If $90 was directionally correct — and some are higher — with the average at 1190, the P/E is around 13 times. Not bad with a ten-year Treasury at about 4% and the headline rate of inflation at 2%.

Vincent Farrell, Jr. is chief investment officer at Soleil Securities Group and a regular contributor to CNBC.