TARP Figures Show The Program Actually Made Money For Government

The market had a spirited rally yesterday, but is a little lower in early trading after a disappointing retail sales report. Advance retail sales for May fell -1.2% when many analysts had been looking for a slight increase.

This pushed the futures lower and weighed on stocks at the open of trading. The next report that came out this morning reversed much of the weakness, at least for a bit. Consumer confidence for June rose to 75.5 from 73.6, and hit the highest level since January 2008. This is a good sign, as consumer confidence is key.

The dollar is higher this morning, while the euro is down. Oil prices are also lower, near $74.85, while gold is betting a little bounce near $1225.

Asian markets were higher overnight, and Spain's stock market is bouncing for a second day. The 10-year yield is lower to 3.24%; and the VIX is lower, hovering just above the key 30 level, which is a level that has acted as support for weeks.

Among the sector ETFs, healthcare is leading (+0.35%), while consumer staples are lagging (-1.14%).

It was also released this morning that the TARP program has received more back in interest than it has left in remaining payments owed. That means that the TARP program has already turned a profit for taxpayers.

I stated when the program was approved that the average taxpayer had it wrong when they viewed it as a giant $700 billion bailout. The program was designed well, and was effective in stabilizing our crucial banking system. Our banks are now in better shape than most banking systems around the world, and the taxpayers actually made money by doing the right thing.

This stands in stark contrast to the fiscal stimulus program that was enacted (the Recovery Act), where hundreds of billions were doled out to states, municipalities, and other pork with little tangible results to show for it.

Trading comment: Yesterday's rally was nice, but not enough to alter my near-term strategy of using rallies to get more defensive. Volume was lagging yesterday, which is a sign that demand isn't that strong on rally days, but has been picking up during selloffs. Additionally, the credit angst indicators I follow continue to hover in elevated territory, signaling continued distress in the credit markets.

I am certainly not outright bearish, for the record, but the recent stance I had earlier in the year of being overweight equities is being reduced.

long GLD