I had no idea the S in Ben S. Bernanke stood for Superman. Apparently, he can lift the entire American economy by making a speech. Of course, the bounce after the rate cut wasn't much of a surprise. It seems investors still have faith that Mr. Bernanke and his cohorts are in control.

I disagree. I do NOT think that the Federal Reserve can fix the imbalances resulting from a twenty year credit boom in a week with a couple of interest rate cuts and a bailout plan for the monolines. He is not MacGyver, the TV superstar who could fix a nuclear power plant with some gum and a paperclip.

The financials are still a mess and the American economy relies on the financials. Here is a great article outlining why George Soros and Julian Robertson do not like the financials. Perhaps the scariest bit in the article is the following quote:

According to the Federal Reserve Board website, U.S. non-borrowed bank reserves have gone from $37B to $199M (nope, that’s not a typo) in the last month.

An article in the Globe & Mail interviewing Satyajit Das goes so far as to say:

“There's only one way, in my view, you can be long financial institutions,” Mr. Cooney said. “You have to mainline heroin for breakfast. You'd have to be that delusional not to understand the risks.”

Unfortunately, not many people do understand the risks. The jury is still out as to whether they are actually on heroin. We will know when the drug tests come back

American Markets

All three major indexes finished in the black this week with the Nasdaq 100 lagging. Here is a summary:

	Nasdaq 100	S&P500	Dow
December 31, 2007	2,085	1,468	13,246
February 1, 2008	1,855	1,395	12,743
Week	3.69%	4.87%	4.39%
YTD	-11.03%	-4.97%	-3.80%
50 day MA	1993	1429	12973
% over / under	-6.92%	-2.38%	-1.77%
200 day MA	1,993	1,484	13,362
% over/under	-6.92%	-6.00%	-4.63%

Two of the really hot areas to speculate this week were the monolines and the home builders. Ambac (ABK) gained a solid 14% on rumours it will be bailed out by a group of banks. According to the NY Times, things are looking so good at Ambac that cash bonuses were awarded management. MBIA (MBI) was up on similar rumours.The homebuilders as a group defied logic and rose in the face of a deepening housing slump. Although I suspect widespread heroin use, misplaced optimism and momentum traders are more likely culprits.

Canada

Taking its' cue from the American markets, the TSX was up 3.28% for the week. The financials led the rise with the energy and gold sectors following the price of oil and gold lower. Goldcorp (G.TO) announced it was selling its' stake in Silver Wheaton (SLW.TO) this week for about $1.5 billion. Although the company said it was to raise cash to develop existing deposits, I would not be surprised if they announced an acquisition or two in the upcoming months.

SunTzu