The media just likes saying the word “pirate,” but I suppose that’s exactly what they are. The name for these marine criminals makes me think of Gooneys or some other fantasy movie that I pretended to be a character of as a child. All kidding aside, not that I wish any harm on crew trying to do their job, it’s refreshing to hear about something other than the global economy, politics, or the great scammers of our time. Now that everyone’s safe, the pirates are dead, and Thai protesters appear to be settling down, we have no choice but to get back to the aforementioned topics.

This may not be the first time we are here but right now the markets are sensitive. There’s less of a resolve in either direction to be confirmed by data or headlines.  Although we are already in the process of laying the groundwork for a foundation, the upcoming earnings reports and data points will be key in establishing either a footing or a bit of disappointment that the market has gotten ahead of itself. This week’s Goldman tomorrow, JP Morgan Thursday, and Citi Friday are especially pertinent. I’d like to insert that the market’s recent overzealousness is what has set it up for possible disappointment. Alan Abelson puts it perfectly, “…the exchange struck us as symptomatic of the insatiable yearning of Wall Street, in general, and sell-side analysts, in particular, to uncover some sliver of bullishness beneath the dismal surface of the unvarnished truth.” (See Barron’s: Barrons Online - More Meltdown) But I do think hangovers are part of this rebuilding process.

I’ve heard talk that lots of factors could make this week bond positive. The first is earnings, second is Fed buying, and third is data, and fourth is that technically speaking, it’s time for a pull-back in stocks, which normally fuels treasury buying. The only solid factor here is that the Fed is committed to keeping borrowing rates low so buying is definite. The other factors have as much potential to be bond negative as positive and it will be interesting to see how the markets digest each. If we have another stock positive week it will only force the hand of the Fed to lay out more cash and so fight the inverse between stocks and treasuries. Today being Easter Monday, action is not at all indicative of what the rest of the week will bring but we are seeing stocks make a comeback on the day on optimism about bank earnings. To be continued.

In a 60 Minutes interview back in March when Bernanke was asked what he thought would be the first signs of recovery he said this: (BERNANKE)”one sign would be that a large bank is successful in raising private equity. Right now, all the private money is sitting on the sidelines saying, ‘We don’t know what these banks are worth. We don’t know that they’re stable.’ And they’re not willing to put their money into the banks.” Goldman was just able to raise $5.5B in private equity dedicated to buying private equity investments on the secondary market as part of a plan to pay back $10 Billion in government funds. Since they have already been able to raise $6B, I don’t think this should be taken lightly.

So, this week here in the U.S. we have a big data week. We have PPI, Retail Sales, and Business Inventories on Tuesday, CPI, Empire Manufacturing, and Industrial Production on Wednesday, and Housing Starts and Philly Fed on Thursday. The numbers could be totally benign or, in search of treasure, the market could take anything better than expected and run, further setting itself up for disappointment as the foundation is laid. I’m still not ready to be bullish equities and I’m still not ready to be bearish treasuries. This should be a fun week for traders though.