NEW YORK, NY

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

A (not so) funny thing happened on the way to the forum. The wheels on the chariot of this rally have been wobbly for several weeks now and yesterday one fell off. I had a buddy that had an old jalopy as a car and one day he was driving and a tire rolled past...it was one of his tires! That's what happened yesterday. Consumer confidence in real life is a flaky number that doesn't always reflect what consumers will do. However, these surveys have been fodder for the bulls. Moreover, I think that these reports will mirror public opinion polls on economic policy, which is good, but will not stop the administration from ramming tax hikes down our throats. So, people are worried and the stock market took notice, but then again it's hard to look the other way when one of your tires rolls past you.

Of course, this is a holiday week shortened week and people are eager to hit the road, but tomorrow's jobs report looms large. The fact is that the action we are witnessing, gyrations in a narrow range, are par for the course on jobs report weeks. Still, it's worrisome when the market goes down so much easier than it goes up. This could all change in a flash, and in fact I think that the market has a good shot at making the next leg higher as there is no doubt the walls are closing in...and everyone knows it. I understand why some people are so disgusted that they are essentially boycotting the market, though sadly those will be the same people that jump into the market much higher. (If you ever get a chance to read "Extraordinary Popular Delusions" and the "Madness of Crowds" you are doing yourself a great service. There is a story of Sir Isaac Newton who warned early on of the silliness of the Tulip craze only to capitulate later and jump in with both feet; he lost it all!)

The point is that this market requires a fair amount of attention (that's our job) and a willingness to suspend belief. But, the next week is critical, and it begins with this Thursday. If there is a sense that the stock market has rallied too far too fast then phones at travel agencies will be ringing off the hook. If Thursday is a big day for job losses, cancel the Caribbean trip and forget about that tan. No matter how the market shakes out, what is happening on Capitol Hill should be a capital offense. That being said, if the market is refueling and on the verge of another rocket launch, it might be best to take the ride, because when it's all said and done, you will be on the other end of a hunt...by the government looking for the contents in your wallets (think Capital One commercials). By the way, the Public Private Investment Partnership (aka PPIP) announcement scheduled for today is being pushed back another week. I can't believe that the powers that be are still going through with this thing

* Banks got $700.0 billion in taxpayer money
* Banks got $340.0 billion in dirt cheap loans backed by FDIC guarantees
* Banks got money for virtually nothing and lend to you for a lot of something
* Banks keep raising rates and fees
* Banks made mindboggling profits in the first quarter (and likely the second quarter)

I sincerely don't understand how those poor people making $30,000 a year but found a way to give candidate Obama $500.0 million can take this without a whimper. If banks get bailed out through PPIP and a handful of super rich money managers take no risk to do this, I hope that the streets fill with people in protest.

Speaking of which, I understand that Wilbur Ross is an economic genius and he's also a nice guy...I've met him several times. But, there is something wrong with the notion that you and I will take 89.0% of the risk and split the profits (with the government holding our share) with Mr. Ross and a few others.

My closing comments from last night's "Cavuto"

"We are halfway through the year and the jury is still out on where the economy goes from here. Sure, we've heard all about "green shoots", you know those microscopic signs of economic life that initially moved the market like the pea that moved the princess to complain about not getting any sleep. The result of those earlier green shoots was a fairy tale-like rally that on one hand suggested the worst was over and on the other hand suggested things were on the cusp of getting better.

This brings me to what will eventually turn this economy around. It's not going to be green shoots or sugary oratory from the White House. Just as I can no longer wow my son with Matchbox cars when he's dreaming of the real thing, the masses want more than just a floor in the economy...they want the return of growth. Where is the economic growth they voted for? All efforts have been focused on banks, big but failed businesses, and a couple of programs for the poor.

Yet, it goes without saying that the key to America's success is its middle class. Today's consumer confidence number showed a decline in the percentage of people that believe things will get better down the road. My inkling is that people are beginning to feel this way because they no longer believe a switch can be flipped to prosperity magically reappearing. They're right about that because the answer to American prosperity is the middle class.

The middle class that includes college graduates, entrepreneurs, business executives, moms, dads, and taxpayers are finally coming to grips with the fact that instead of being recipients of aid and empathy they will be the unwitting sources of money to fund programs they will not even benefit from.

Americans love fairy tale endings, and maybe fewer job losses could kick off a second half rally, but without the middle class feeling confident and spending money we can forget about a real economic turnaround."

Tidbits and Observations

Yesterday, an Associated Press report stated Michael Jackson's net worth to be around $237.0 million. I have a great source that bets it is much better than their estimates; I've seen proof his assets were $1.3 billion in 2007. Moreover, his Sony contract has a wrinkle in it never reported that could mean it's worth more than $2.0 billion right now. Just think, with his legendary financial problems why was he always able to get loans? His cash flow was more than $39.0 million in 2007, that's why. Of course, the numbers (mine and those from the Associated Press) will grow like a redwood as long as father Joe Jackson, Al Sharpton, and Jesse jackson don't turn Michael's legacy into something it doesn't have to be. Anyway, I have copies of the 2007 appraisals on Neverland Ranch, and copies of signed contracts. It's really fascinating.

China's economy expanded for the fourth consecutive month as the nation's stimulus package, coupled with record bank lending, sent its PMI to 53.2 in April from 53.1 May. The message here is clear...a real stimulus plan not focused on social spending but on shovel-ready projects has been a shot in the arm and banks are actually making loans rather than hiking rates (the Financial Times reports today that Citigroup (C) raised interest rates on as many as 15.0 million credit card holders) and hoarding money.

France is cutting its value added tax (VAT) at bars and restaurants to 5.5% from 19.6% just as our government is toying with the idea of implementing this destructive tax to help pay for healthcare. It's really bizarre, Germany is cutting taxes to spark economic growth, France is cutting taxes to get consumers to spend, and Chinese banks are lending money...seems like we lost our playbook on prosperity and socialists and communists picked it up.

Today's Session

There was a slew of economic data out this morning ahead of the big jobs number tomorrow. Mortgage applications hit a seven-month low even as the 30-year rate dipped to 5.34% from 5.44%.

Challenger, Gray & Christmas released its latest numbers on mass layoff announcements and for the sixth consecutive month the number was sequentially lower. The total has dropped precipitously and can certainly be viewed as a positive development.

Results from the most important report of the morning were mixed at best. ADP's initial reading says that there were 473,000 net jobs losses last month. The total is more than expected and well above consensus for the Labor Department number due out tomorrow morning.

Just like yesterday the market was poised to takeoff. There is much pent-up buying that wants to be released but it needs the right catalyst. Futures are still pointing higher but this could have been a triple-digit point session for the Dow Jones Industrial Average if ADP's results revealed fewer job losses. Remember, that until it positively surprised a couple months ago the Street had largely been ignoring this data. There are still discrepancies with this number and those from BLS, which might mitigate disappointment seen when equity futures recoiled upon the release of the data.