Market Talk

The news headlines certainly aren’t bullish today, but gloomy news seems to be little match for the bountiful liquidity traversing the globe.

Do yourself a favor and look at the top headlines on WSJ.com this morning. They are uniformly bad. Not a bright spot in the bunch. Bombings in Libya, radiation in Japan, chaos in Portugal, a slide in durable goods orders here in the U.S., a downgrade to Spanish banks.

Okay, the jobless claims fell. You got us. But you may be wondering to yourself, what’s holding this market up? You’re not alone. Even one of the most savvy market watchers we know can’t find any good reason to explain why the market’s rising.

UBS’ Art Cashin, in his morning comments today, calls it the “Dorothy Gale rally,” as in Dorothy from the Wizard of Oz. In other words, all it takes is a little magic.

Nowadays, I’ve started to refer to the up-move as the Dorothy Gale rally.  Dorothy and her little dog, Toto, got swept up in an awful tornado only to land in a place that looked peaceful and quite wonderful (although it was imaginary.)

These days, traders, much like Dorothy look out their windows (which are computer screens.)  Sometimes they are filled with rioting mobs, firing tanks and falling buildings.  For Dorothy that would be like seeing a chicken coop, a park bench or a church steeple whiz by.

So, if you are Dorothy and you look out the window and there are no benches flying by, it might be a good day.  Maybe it would be okay to go outside and play with Toto for a little.

Yesterday, there were no benches flying by.  The world was not at peace – far from it.  But the flying benches were on the other side of the mountain and, thus, not so readily visible.

Instead, past your window strolled Laszlo Birinyi who hinted the yellow brick road that we call the S&P might be a longer road than many thought.  And Warren Buffett teased with Becky Quick that there might be some bargains out there too big even for him to pick up.

Also, passing by were folks like Bill Miller who said stocks were probably 20% undervalued.  And then Leon Cooperman said “stocks were the best house in a good neighborhood.”

So, with no flying benches and lots of cheery neighbors, Dorothy and Toto left the dark bedroom around 11:00 (yesterday) and went out to frolic in the meadow, midst the spring flowers for the rest of the day.

So there you have it. Click your heels three times, say “there’s no place like home,” and soon enough your portfolio will look just like Warren Buffett’s. You’ve had the power all along.

Talk about an Alfred E. Neuman morning. Bulls sporting the “What, me worry?” attitude after the collapse of Portugal’s government late yesterday and expectation it’ll join Ireland and Greece in asking the EU and IMF for a bailout, currently pegged around $113 billion.

It certainly doesn’t come as a big surprise, but the reaction in European stock markets, euro rallying seems just a little too cheery. There’s consequences for Spain, Portugal’s biggest trading partner and Moody’s downgraded Spanish banks in the wake of the Portugal developments. That’s among the items being shrugged off this morning, along with percolating oil and a weaker-than-expected February durable goods orders.

European stock markets have strengthened, rallying across the board, and that’s putting US investors at ease. Portugal? Spain? Well, if the Europeans aren’t worried about it, why should we? Or so must go the thinking.

S&P futures up 7.60, off earlier highs. Ten-year note lower, yield at 3.37%.