Stocks continue to rise in the face of 30-month highs for oil. Gold hits a new record at 1,468.90 and Treasuries are declining. Bulls find new reasons to buy each day, despite the challenges of Japan, the Middle East, and European member states, and rising commodity prices to name but a few.

Indications are that the US economy maintains sufficient momentum to avoid a double dip recession. Non-farm payrolls rose by 216,000 jobs last month and the unemployment rate inched down from 8.9% to 8.8%. Domestic stocks, as measured by the MSCI US Broad Market Index, were up 5.8% for the first quarter of the year. The Dow Jones Industrial Average gained 6.4% for its best first-quarter since 1999. The Fed, eyeing economic strength might be thinking about increasing rates sooner rather than later as well. Minneapolis Fed President Narayana Kocherlakota said it was “certainly possible” for interest rates to be raised by more than half a percentage point this year. 

Markets are reacting positively to a rare concerted intervention in the currency markets by the world’s biggest economies, known as the G7, to stem the damaging rise in the value of the yen as well as from news that Libya’s government announced an immediate cease-fire and end to all military operations across the country. A strong yen makes Japanese exports much more expensive on world markets. As a primary part of Japan’s economy, exports will be crucial to the re-building of their economy. Additionally, Japan’s decade-long struggle with deflation will be made even worse by a strong yen. 

Do you ever wonder if you will have enough money to see you through the surprises and challenges ahead? Or, if you are blessed with abundance, do you ever think how nice it would be to quantify your surplus, find purposes for it, to enjoy the benefits today; rather than leaving it to the next generation to fight over? Truth is, most people have no idea whether their plans are over- or under-funded, or by how much. They spend most of their time worrying about return.

The unemployment situation in the US appears to be improving marginally with the latest government release of data. Employers added 192,000 workers in February and the unemployment rate unexpectedly declined to 8.9%, the lowest level since April 2009. During his Congressional testimony this week Fed Chair Ben Bernanke said there were “grounds for optimism” about the labor market in the coming months. 

Mounting problems in Libya sent oil prices over $100, natural gas trading to record highs, and equity prices reeling. The MSCI US Broad Market Index, which represents 99.5% or more of the total market capitalization of all US common stocks was down 3.9% intra-day, but closed down 2.9% for the week as of yesterday. Realization that there is enough oil supply, a number of good earnings reports and today’s news that last year’s economy (despite a downward revision) still grew the best in 5 years has stocks up .6% this morning. 

It was a mixed week for economic data, but a pretty good one for markets. The S&P looks to finish up close to 1% and the 7-10 year Treasury index is up .25% for the week so far.  Manufacturing news and corporate earnings continue strong, but the consumer may be taking a break. And still bouncing along the bottom, jobs and housing showed few signs of recovery. 

It was a light week for economic data, but the bulk of it was very encouraging. Yesterday, the Treasury announced that tax receipts are rising faster than government spending. It is a clear sign that the economy is gaining strength. The Treasury’s budget showed that tax receipts are up 9.4% while government outlays rose only 4.8%. Four months into the fiscal year, the deficit is at $418.8 billion, down from $430.7 billion a year ago. Any news that the economy is growing faster than the government is good news.

The flurry of economic data released this week was on balance surprisingly strong, with the notable and regrettable exceptions of jobs and housing. Fed Chair Ben Bernanke summed up the economic outlook yesterday. “Until we see a sustained period of stronger job creation, we cannot consider the recovery to be truly established.” Yet almost every other metric is strong and getting stronger. Quarterly corporate profits are sharply ahead of a year ago, manufacturing is growing stronger, productivity continues to rise, and consumer spending as evidenced by retail sales is gaining strength.

Common sense as defined in the Encarta Dictionary is “sound practical judgment derived from experience rather than study.” In his 1776 treatise Common Sense, Thomas Paine used plain language to speak to the common man and woman in America challenging the authority of the royal monarchy over them. For the next few minutes, to the extent possible, try to suspend influences that pull you away from common sense thinking; such as politics, media, and persuasive speakers.