It seems the number one answer you hear from ANY question posed to any “talking head” on CNBC or Bloomberg begins with “well, we’re not sure, but we think….blah blah blah”.

Because the financial system is the spine of the economy, the banking fix should have taken precedent over the stimulus (spending) package.  Government officials need to make clear what their interpretation of “nationalization” is and refute it.  The market is afraid of the potential socialistic “takeover” of the banks.  The government has made vague comments on how this is not their desired intent, but the lack of clarity is astonishing.

We need to see three things.  First, clarity on what degree of “Nationalism” is possible, or better yet, a stronger comment about the desire NOT to nationalize the banks.  Second, a program to either get the toxic assets off of the balance sheets of banks, relaxation of mark-to-market accounting rules, or a combination of both.  Lastly, a commitment by the government that they will inject sufficient capital if needed.  This would also go a long way to comfort debt and preferred shareholders and will also help attract private capital back into the system.  If the above would happen, we would finally see some upside to this market.

This market needs to find a path upward.  The market needs to find its legs and get up to sprint speed because we know the wall of inflation is down the road.  Maybe not this year, maybe not in 2010, but it is coming.  With the trillions of greenbacks being printed over the next couple of years, we have to prepare for an ever shrinking dollar.  This means proper sector equities, alternatives, and strong yielding fixed income.