NEW YORK, NY

Check me out this week as I host "Cavuto" on the Fox Business Network at 6:00PM EST

Let's face it folks, the market has more or less been marking time since the last jobs report. As much as Wall Street economists dismiss the jobs report as "backward looking" and inconsequential (even when admitting unemployment would reach 10% President Obama eluded to the fact such a milestone would or could be good news since it reflects the past) the fact is that it's trends in jobs and then it's all other economic reports. It's not even close as to where the Street will take its cue, and this week's number could dictate how hot or cool this summer will be for investors. There was much confusion with the last report, which came in so much lower than expected the results had to be written off (think election results from Iran). Hence, the mostly sideways market which ushered in ever-growing angst. There are other reasons for the hesitation of the market of late, too.

There is still a cloud of fear. I suspect that it's a combination of things, including:

> Amount of spending by federal government
> Amount of money printing by Federal Reserve
> Pending crash of commercial real estate
> Pending wave of credit card defaults
> Growing foreclosures in Alt-A and Prime mortgages
> Growing job losses among college graduates
> Reluctance of people to spend
> Reluctance of banks to lend

Last week we saw that incomes soared by 1.4% driven by adjustments in government programs, though spending increased a very pedestrian 0.3%. It's obvious that people are afraid to open their purse strings or wallets, and with good reasons. It is equally obvious that banks are reluctant to open their vaults, but their reasons seem selfish and counterproductive...and a sad joke in the aftermath of all the damn taxpayer money they sucked up with a straw. I spoke with the CEO of New York Community Bank (NYB), Joseph Ficalora; his bank was the largest one in America to turn down TARP money. More than a half a billion the bank turned down as it saw no reason to take the funds; the bank is run by basic banking principles and didn't need the funds. It's for this reason alone that the bank should be used as a case study in how to incorporate restrain when rampant greed is all about.

This bank should have also been in a position to benefit from greedy banks that should have gone under. Unfortunately, those banks were rewarded. The crazy thing with banks that were rewarded for poor actions is they have turned around and denied the very source of their lifelines with any assortment of loans. In fact, banks are sitting on more money now then when TARP checks were distributed.

* Large banks have 226.0% more cash now than they had in May and 13.0% more than in November
* Small banks have 221.0% more cash now than in May and 46% more than in November

Small banks could be forgiven for holding onto money tighter than their larger brethren, who have been able to raise billions in cheap money along the way. Overall, there is more cash in banks seven months after the bait and switch we call TARP came into being.

So, with banks holding back, cutting credit lines (the horrors stories I hear on my radio show make me want to puke and fight), jobs vanishing, and home values melting it's understandable people are saving much more.

What it all means

Mark Lieberman, Senior Economist at Fox Business Network, made a sage observation that he shared with me last week. One of the reasons that inflation hasn't been a problem is all the money being printed and distributed has gone to banks and they are sitting on that cash. But, their business model is to lend out money, especially when they get it for free (or damn near). With rates at zero and the Fed buying $1.75 trillion in mortgages and assets money will get down to the street level and it could be a problem. Ironically, it could be consumers that are still smarting from the scare of a lifetime who show restraint. In 1Q91, recession period savings climbed to 7.3% while GDP declined 2.0%. Savings continued to edge higher even after the recession ended, climbing higher over seven quarters until peaking at 7.8% in the fourth quarter of 1992. I'm not sure how much of a similar scenario will play out this time because the fact is that savings in general were trending lower for a long time after peaking in 1Q84 at 10.3%.

The powers that be understand they must re-inflate assets before there is true comfort with anyone spending more money. In the meantime, people are doing the smart thing even if it means the broad economy suffers from the paradox of thrift.

At this point there are a few paradoxes at play.

Tidbits and Observations

* I'm working on a piece on Boeing (BA), which continues to exhibit the kind of mismanagement that these days eventually cost taxpayers billions of dollars. The thing is that it's one thing to takeover a car company and then force people to buy a certain kind of car, but Boeing plays on a global stage and it's going to take more than a fuel efficiency pitch to turn around years of poor timing and missteps.

* Billy Mays, 50 years old, passed away yesterday and the cause of death is a mystery. However, there is some speculation a rough plane landing where debris landed hard on his head is the only thing out of the norm in his life of late.

* Meagan Fox...enough said

* Bernie Madoff is sentenced today and faces a max of 50 years; do you think the White House could let Dick Cheney handle this one, just this one time?

Morning Notes from WSS Research Desk

Brian Sozzi

* Those workers in the Washington, DC area clamoring for the unionization of a Wal-Mart (WMT) store should certainly read the news headlines on General Motors of the past year. In addition to poorly aligned products, General Motors' union had a pretty lavish pay scale (understatement). If this particular Wal-Mart store does unionize, it could be an indication of what lies ahead for the world's largest retailer. Unfortunately, those same union workers who may feel vindicated in receiving a slight wage increase, will be forced to spend more at the once low cost leader for food and general merchandise (you can't expect Wal-Mart to remain aggressive on prices if it has to pay wages uncompetitive to others in the retail trade based solely on its shear share of the market).