Today’s news includes statistics that only emphasize the phenomenon I’ve written about before: look at quantitative trends and you’ll be a pessimist but if you look at qualitative trends you’ll be an optimist. As you read the following, consider these questions: How long can statistics such as retail sales keep going down while confidence in the prospects of a recovery keeps going up? At some point, if the quantitative statistics don’t flatten out and start moving north, wouldn’t confidence start heading south? Alternatively, if confidence keeps going up, will that be enough to pull the economy northward with it? I think the answer has to do with what is giving rise to the confidence, and that is Barack Obama.

First, today’s quantitative statistics:

I recommend a terrific article about the Department of Defense budget being proposed by Secretary Robert Gates with the strong support and influence of the White House. It is entitled “Gates’ Plan for Acquisitions Is Seen as a Start,” written by Kevin Baron, a reporter for Stars & Stripes, which describes itself as “the independent news source for the U.S. military community.”

This is the lead of the story, dated April 10, 2009:

One of the real beneficial experiences of my life was working closely with Dwight Schar, who is best known as Chairman and former/founding CEO of NVR, Inc. (NVR), one of the nation’s largest and the most profitable home building companies. In the summer of 1986, when I went to work for him, as VP, Corporate Affairs (mostly investor relations, until 1991 when I continued the relationship for two more years on a retained basis), he had recently taken NVHomes public. It was a small home building company active in the Greater Washington area, primarily Northern Virginia. Schar co-founded it with some friends and business associates; he was clearly the leader.

The company went public as a Master Limited Partnership (MLP), which meant that rather than paying taxes at the corporate level, the individual equity investors (who owned membership interests rather than shares of stock) were allocated their share of the profits, and they would have to pay taxes on that. The company paid distributions of profit that would minimally be great enough to cover investors’ tax obligations. In addition to that, at the time, MLPs were also considered to be PIGs (Passive Income Generators). That meant that if the NVHomes investor had passive losses (e.g., from an ownership interest in an apartment building), they could balance that against the NVHomes profit and thus as much as 100 percent of the distribution they received from NVHomes could be pocketed.

I recommend a terrific article about the Department of Defense budget being proposed by Secretary Robert Gates with the strong support and influence of the White House. It is entitled “Gates’ Plan for Acquisitions Is Seen as a Start,” written by Kevin Baron, a reporter for Stars & Stripes, which describes itself as “the independent news source for the U.S. military community.”

This is the lead of the story, dated April 10, 2009:

If you are investing, looking for a job, making (or not making) a purchase, and generally behaving with the belief that a recovery from this crisis is somewhere over the horizon, you may have the wrong premise. I have believed for a while that if “recovery” means a return to the way things were, then we’re probably not going to see a recovery. This belief is based on my thinking that the current global economic crisis in not simply economic in cause or nature, but cultural in both. As such it will have cultural consequences, and I think they will be wide, deep and long-lasting.

I become more convinced of this when I see how our culture and political philosophy is changing. I came upon another example of that, courtesy of Michael J. Panzner, who is a frequent contributor to Seeking Alpha. He also writes for his own blog, Financial Armageddon, where he sometimes posts articles that are in sync with his basic belief that the world has been due for a “financial unraveling.” His Post of April 7, 2009, “A New Kind of Crowd,” refers to a story from The Financial Times entitled “Assistance Soars in US.”

Three governments around the world have now stepped down as a result of ongoing citizen protests arising from the economic crisis: Iceland, Latvia, and Czechoslovakia. Hungary looks like it could be number four, but there are several other candidates. Gordon Brown looks like he may not last too long. In the meantime, President Obama is thrilling the populace wherever he goes, including another well received speech in front of 20,000 Czechs on Sunday. What does this mean, and how can it translate into reaction in economic and stock market terms?

I don't have the answer - nobody does (yet) - but I not so concerned about the lack of an answer as the fact that few seem to be asking the question, or caring.

I am reading posts on blogs and Seeking Alpha and columnists asserting that vigorous activity of people buying their first home at distressed prices is an indication of the bottoming of the real estate market. Do not be deceived! I was VP at NVR, which at the time (1986-1990) was the nation's largest home builder and is still one of the nation's largest, and certainly best managed in terms of P&L and balance sheet (primarily because they do not buy land but instead buy options that they exercise when an NVR customer contracts to buy a home on the lot). I learned a great deal about residential real estate there. And here is one of the most important lessons:

Residential real estate is a food chain. Somebody buys their first home and the seller of that home takes their equity from the pay-down of their mortgage and any appreciation in the house and uses that money to buy their first time move-up home. When they buy their first move-up home, the people they are buying from takes their proceeds and buys their second move-up home. And so the chain continues. Great.

I am 63 years old, born in 1945. In my life, I have lived with two different American Dreams, and I am now seeing see a third emerge. The change will carry with it very significant consequences.

My father’s father personifies the American Dream pre-WW II for me. He was the first of his family to land at Ellis Island and then live in New York. He worked to bring over a brother, and then together they brought over others until basically the whole family was living in New York. Once here, they went into business. Legend has it that my grandfather operated a street cart selling hot potatoes, and that the enterprise lasted maybe as much as a full day. He tried a few things apparently until he and his brothers started a woman’s coat business that did okay in good years and was able to hang in there in bad years - I never really knew what caused a year to be good or bad.

My perspective on most issues is biased from forty years in the communications business, with twenty of those years being focused on investor relations issues, and all but ten years involved in my own entrepreneurial communications firms (the company I co-founded in 2000 has consistently been ranked among the nation’s fastest growing for each of the past several years). Over the course of this career, I have seen the communications business change in major ways. But right now, the industry is in the midst of a truly fundamental revolution. The investment community clearly recognizes that there has been a major change in the business and also accepts that more change is on the horizon. But is that view robust enough?

Some of the fundamental changes that are occurring in communications may be obscure to the investor. Below, I offer just four of them with some comments on how each may translate into stock market consequences.

If history does repeat itself, can it happen in a mirror image? Consider the strange similarity (in reverse) between Barack Obama and Ronald Reagan. They are distinct mirror reflections of each other, and if that continues, we just might see a major Obama market rally - in about six years.

There are a number of minor mirror image attributes about Obama and Reagan. For example, Reagan was the oldest president in U.S. history while Obama at 47 is fifth youngest. And both were outsiders but in different ways: one because of his prior career as an actor and the other because of his race. But there are much more significant mirror attributes than those.

Yesterday morning I read a brilliant article analyzing the market bottom: “Markets Have Hit a Bottom, But Is It THE Bottom?” by Eric Coffin, a contributor to Seeking Alpha, where I saw the article posted. Coffin does a great job taking a look at various economic fundamentals from the price of copper to the actions of the Fed.

He comes to the conclusion that although there are some positive signs out there, too much volatility remains to make any firm predictions about whether the market has hit a true bottom or not. I agree with him, but I also have a major problem with the value of his predictions. In fact, virtually every day I read articles on Seeking Alpha that are similarly brilliant and argue either for or against the market bottom and direction. Each makes a similar mistake.

The G20 summit of the world’s largest economies does not officially get underway until Thursday, April 2, but there are already signs that the event could be a significant benchmark in the evolution of the economic crisis.

Obama Stands Alone.

There is a massive protest called to take place throughout France on March 19. According to a Reuters story datelined March 19, some 75 percent of the population support this protest, which is expected to draw more than one million people to the streets. This protest may be yet another indication that the worldwide economic crisis is morphing into a global social/cultural/political crisis. If that is the case, any current predictions about when the economy may bottom would become irrelevant, because economic programs will be trumped by political turmoil.

I’ve suggested before that there is a pattern of protests around the world that share three characteristics: 1) they are conducted by and for the middle/working class; 2) they are not so much about one or two hot issues but more about a mood of anger against governments, bankers, the investment community and certain corporations; and 3) the remedy they seek is some government action (or inaction) they want taken that would address their needs before the needs of those they see as responsible for the situation in the first place.

I have a great respect for President Obama and his team and his ability to tap into the tone of the country, which he will certainly leverage during his presidency. I also appreciate the goals of his stimulus package. It would probably have a benefit that the country needs, especially more mid- and long-term results such as a better infrastructure that is sorely needed. But I do think there are alternative ideas that would stimulate the economy much sooner and provide much more of a “jolt” than the President’s plan would provide.

This morning I read a great idea by Bill Zielinski, who wrote an article “Stimulate Spending With No Mortgage Payments for a Year,” which was published on Seeking Alpha. The idea is radical, but has merit. He cites math that shows that if everyone in the US who held a mortgage was given a one-year holiday from paying that mortgage it would cost less than $700 billion, or in the neighborhood of the proposed stimulus package. But, as Zielinski points out, that money would go straight into the economy when consumers use the elimination of what is their biggest monthly payment to buy things (which result in jobs), save, pay down credit card debt, or even pay down their mortgage, whichever they want.

I remember reading the philosopher Georg Wilhelm Friedrich Hegel while in college. I’m very certain that what I remember about him was more attributable to the extraordinary lectures of my professor, Thelma Z. Lavine, who at the time (1965-67) held an endowed chair at George Washington University and who subsequently was a Robinson Professor at George Mason University.

Hegel developed a system for looking at the world that was based on dialectics - opposites. This system was applied to many philosophical issues, including ethics, but is perhaps most notable because his view of history was used by Marx as a cornerstone for his own communist philosophy.