As we head into the late spring season, sell in May and go away is the operative metaphor. However, that may or may not happen. I've been hearing much talk about a correction or pullback. That's been stewed about for a few weeks now. This can't possibly continue, right? Well, much like the amazing drop in February and March could not extend (it certainly did) further than we thought, this rally could just be getting warmed up. I'm not a big fan of predictors other than for mere conversation. Opinions run wild when there is a big crowd waiting for them.

It's Time to Man Up over Employment

Next week is much about employment. ADP, jobless claims and the employment number come out Wednesday-Friday. Of course, we'll likely hear about the bank stress tests, too. But I'm going to take a different direction in regard to jobs. Yes, the jobs recovery is usually the last thing to occur in a recession. I suspect some positive data is forthcoming. Manpower, a job agency firm...came out with great numbers two weeks ago. I've found historically that when they start to improve that is a sign jobs recovery is around the corner. Now, it's a bit early and this is but one piece of information. Let's see how this works out in the coming months.

Anecdotal Signs of a Recovery

For the past several weeks the market has been climbing on bad news. Actually, it started in December with the awful jobs number. While that was too soon for a recovery to ensue, it was a good sign of things to come. Lately though, some good signs have been seen. Inflation is contained...look at the mild behavior in gold and the drop in TIP shares. While GDP was dreadful in the first quarter that is history, the markets look forward. Employment costs are down and profits are still seen in certain groups. Sector strength and rotation have been the order of the day, the dollar is still stronger than other currencies and bond yields are still rather low.

10-Year Treasury Bond Yield Chart


The Hidden Stimulus

Last week the Obama Administration came out with a plan for mortgages. This time it was about secondary or HELOCS. This is a huge thing for the consumer and the economy. How is this so? Take a look at the details below, but my guess is this will be good for retail, restaurants, casinos...as more discretionary spending dollars hit the economy. Imagine cutting rates to 1%, and even taking principal off the balance. Take a look at the details below:

The Obama administration unveiled an expansion of its $75 billion foreclosure prevention plan yesterday, providing new subsidies to mortgage lenders and investors. Under the expanded plan, some homeowners could see their payments fall significantly and the interest rate on their second mortgage pushed down to 1 percent.

The administration's housing plan pays lenders to help borrowers stay in their homes by modifying their mortgages to an affordable level. But, the plan as first announced in February applied only to primary mortgages. Now, lenders will be eligible for payments when they modify the terms of a second mortgage, including a home-equity line.

Under the new plan, lenders would receive $500 for modifying the second mortgage, plus $250 a year for three years if the loan remains current. The borrower would be eligible for $250 a year for five years to lower their principal balance. The borrower could have the interest rate lowered to 1 percent, depending on the type of loan, with the government sharing the cost of the rate reduction and also the reduction in principal.

Price Headley is the founder and chief analyst of BigTrends.com.