Good Morning

1. Is everyone trying to call a top?  It seems like it, and that I'm not the only one to say be careful.  Basically I have no idea if this is a top or not.  We can observe that the US posted its first surplus in January in many many years.  Calling a market top is nearly an impossible task.  If you listen to the talking heads, many are calling for a market turn down, and if it does turn, they will proclaim their greatness. As I've stated, long term investors should be very cautious in making long-term investments until the song-and-dance in March is resolved between the Congress and Obama.  Short term traders should follow the trend within their time horizon.  For long term investors, avoid calling a top, but practice discipline in money management.
2. President Obama in his State of the Union address, spent most of his time talking about the poor health of the US economy.  President Obama is very good at delivering a speech, don't you agree?  However, he provided no funding plan for all the programs he wants to enact.  If you want to compare (which I'm sure you do not), study Venezuela since Chavez became president.  I promised my best friend in NY that I would avoid making this a political blog.  It is not a political blog, but Economics, investing and politics are tied together.  In order to make sense of the "big" picture", one (me) has to have an opinion of what the political agenda means to the global economy, the US economy and all the other economies since the world is very interrelated economically.
3. The surprise budget surplus pushed the dollar higher against most currencies yesterday.  The report showed a surplus of $2.88 billion, and we have not had a surplus in January since January 2008.  The Congressional Budget Office is forecasting the deficit will drop to 5.3% of GDP during the fiscal year ending in September 2013.  They are also forecasting growth, and the deficit will continue to drop through 2015.  
4. The big problem is debt the US is holding as a percentage of GDP, and this figure is being forecast to continue its climb.  According to the Economist magazine, publicly held debt as a share of GDP will grow to 87% by 2023; whereas it is currently at 73%.  THE PROBLEM IS INTEREST.  And if you worry about such things, if the interest rates blip up even a little, the interest amounts will grow exponentially.  That is why Yellen was trying to calm any discussion about easing up. Gentle Reader, just what do you believe will happen if the interest rates double over the current rate?  Is that possible?  
5. Goldman Sachs retail sales numbers were not good.  These economic reports are important.  You can find a list every day at http://www.forexfactory.com/ that provides the reports across the world.
6. It turns out that the statement by the G7 on currency devaluation had a calming effect on the market.  Some lip flapping by an unidentified finance minister of the G7 said they were concerned about the excessive moves in the Japanese Yen.  BOE (England) Mervyn King said currencies should be allowed to fluctuate based on monetary-stimulus measures.  All this bru-ha-ha whipsawed the Yen yesterday, but the Yen ended up lower.  Tomorrow the BOJ could increase the pressure on the currencies with the release of their monetary-policy decision.  
7. As you know, Mark Carney  is leaving Canada to take over at the BOE.  Mr. Carney wants to keep the possibility of additional stimulus in the UK open even though inflation is beginning to show.  The pound sterling came under selling pressure as investors question the success of the current stimulus measures taken by the BOE. The UK economy is less than robust even after all the efforts to stimulate the economy.  Mr. Carney also has called on the G20 finance ministers to refrain from targeting exchange rates; specifically calling out Japan's currency policy.  Carney wants the G20 (meeting in Moscow this month) to expand on the G7 statement.  
8. The Canadian dollar had a good day yesterday.  It helps the Canadian $ when the price of Oil increases.  Crude Oil has climbed for the last 3 days, and traders in London (specifically) have been saying they are more confident in the US economic rebound.  The traders, realizing this, have bought both Brent and Sweet Crude.  In addition, US oil stockpiles slumped last week, and OPEC revealed that supplies will need to be boosted 100,000 barrels a day in order to meet current global demands.  This will help Canada's currency and the Norwegian Krona.   
9. Where is inflation headed?  It is important to have some precious metals in your portfolio in order to hedge against the possibility of inflation.  Bloomberg is reporting that inflation in the US is moving higher, while the price of gold is stable to lower.  If gold catches up, then gold (and silver) will be a good place to have part of you portfolio.
10. Remember, gold (if you buy any at all) is a long term investment.  The ROI on gold for the last 2 years is not good, and any stock market index (except China's) beat gold and silver.  However, the natural enemy of Central Banks is GOLD.  These banks want to make sure gold price stays low. Russia and China are the wild cards, in my opinion. Watch what happens in Russia now, as they buy more and more gold to hedge against the fall of the US $.  Putin is playing another game to control the world other than the game he played as part of the KGB under the Communist Regime.  Ultimately, he will have to move Russia even closer to China as Russia's #1 trading partner using Yaun and gold; not US$.  Interesting times... 
11. One Russian lawmaker, Evgeny Fedorov, laid out the strategy in simple terms. "The more gold a country has, the more sovereignty it will have if there's a cataclysm with the dollar, the euro, the pound or any other reserve currency," he said in a phone interview with Bloomberg.  http://www.dailyfinance.com/2013/02/11/russia-gold-buying-spree-vladimir-putin/