I am new to this forum as well as any blog at all.  I felt compelled to write what I have observed and communicate it to those who may be interested, so here we go.

The market has continued to climb for 8 months now; as it ascends people have taken heart that perhaps the economy is bottoming, a turn around is soon to come, and so forth. As we watch and listen to pundits and their opinions, are we able to discern what the market and not the commentators, has to say?  Let us look at events, and their effect on the market, and see if the message of the market comes clear.

Last September, Congress quickly put through a bank bailout plan, with the expressed purpose of adding "liquidity" to the financial markets through various financial institutions. The money was to provide liquidity to the banking institutions so that they could, in turn, provide funding for homeowners to interrupt the escalating foreclosures. This money was also to provide funding for small businesses so that they could make payrolls and invest with the desired effect of slowing unemployment.  The expressed intent of this rushed legislation was to slow foreclosures and slow unemployment through small business by "unfreezing" the credit markets.  Effect on the market: it continued down. The TARP, as we now know it, served neither purpose.  What it did do was to shore up balance sheets of large financial institutes by creating assets that were no longer there.  It didn't make money available to homeowners or small business.  Now, a year later, we can see the effect: Wall Street financial firms have greater value, making their stock shares attractive to Wall Street to buy. Thus, the market ceases to fall and begins to ascend.  Small businesses create jobs, not Wall Street.  This is precisely why the stock market rises as small businesses continues to struggle, and foreclosures continue.  The fundamentals of the economy, jobs and home ownership, have not been effected, not by TARP, not by the Fed rate at 0.  These policies were implemented to save Wall Street in spite of the way they were advertised.  There is much to be written here, and perhaps I will write more later, but to be consistent with the title let me summarize with this:

What the "market" is telling you is that all the actions policymakers have undertaken is very good for Wall Street, perhaps providing the greatest environment ever for them. This however does not translate in any way to an improving economy.  The market is completely disconnected from the economy, where we participate.  As we move forward, let us bear in mind this truth and discern between the "market" and the pundits: what helps Wall Street does not translate into what helps the economy; it's not an indicator, it's not a prophet.