Bears, Bulls, Chickens and Pigs: wOw’s Wall Street Weekly with Liz Peek (Week of 4/5) 

Editor’s Note: Liz Peek is a financial columnist and the author of wOw’s SHEconomics. 

Mother Nature is not helping. It snowed yesterday in New York —can you imagine? Forget the new Easter outfit! Last weekend, when the sun finally warmed up the Northeast, my retail spies tell me that business was brisk; this week not so much. Apparently Fed Chair Ben Bernanke can’t control the weather.

Let’s hope he can control the financial markets. The tidal wave of government initiatives aimed at revving the economic engines has so far yielded only modest results. Programs like Treasury Secretary Geithner’s PPIP (the public-private partnership) and the TALF (Term Asset-backed Loan Facility) that require investor participation may have been doomed by Congress’s shenanigans over AIG’s bonuses. Who wants to get in bed with Barney Frank for heaven’s sake?! (Maybe I should rephrase that.)

By the way, it occurred to me this morning that trying to sort out these acronyms is like learning every four years to distinguish toe-loops from salchows; come another Olympics we have to figure it out all over again. I guarantee you that five years from now none of us will have a clue what TARP stood for.

Anyway, the TALF is meant to boost lending for myriad purposes, including credit cards, student loans and auto purchases – for actual people. The first TALF auction drew a disappointing $4.78 billion of loans; the most recent one attracted only $1.7 billion. This is alarming, since loosening such credit is essential to putting soccer moms back in the consumer driver’s seat. The Fed minutes from mid-March released yesterday say it all: “Private firms might be reluctant to borrow from the TALF out of concern about future changes in government policies that could affect TALF borrowers.” No kidding.

The PPIP is looking even more fragile. Investors are fearful that if they join in and make a profit, Congress will be outraged and will levy a tax on their gains. I would be, too. 

The PPIP has not yet been launched, but of course has been dissected ad nauseam. Investors continue to worry about banks going bust, and indeed an especially gloomy report on the topic issued Monday caused the market to crater for the first time in weeks. The government’s planned stress-testing of the banks continues to cloud the sector’s prospects. I say, “Get it over with!” Until they do, and the big banks have passed, the market may tread water. 

Still, it’s not all about the banks. As I said last week, the recent rally reflects good news from U.S. auto sales, housing, consumer spending and reduced inventories. As we kick off earnings season, when companies will report their first-quarter results, look for the market to plunge with shortfalls and rise with positive surprises. The good news is that analysts have substantially lowered estimates for this year. Yesterday, for instance, Bed, Bath and Beyond reported happy news — the stock was up 24%.

Another cheering the market yesterday was Pulte Homes’s proposed purchase of rival Centex. Acquisitions bespeak confidence, and in this case also suggest that the plunge in homebuilding may be moderating. Last week saw an 11% rise in loan applications for new houses.

For sure, a 50% selloff in stocks should spawn takeover activity. Though financing is basically nonexistent for buyouts today, corporations with strong balance sheets (and there are plenty of those) should jump in to take advantage of cheaper prices.  Nothing could make the market – and investment banks – happier.

Elsewhere, reports suggest that China is growing more rapidly than expected. Demand for steel, chemicals and coal are rising in China, and consumers are boosting auto purchases as well. This is very bullish for Asia, and indeed for the entire world. Expect to see China become an ever-louder voice in international conversations.