We appear to have finally reached the end of the latest chapter of the Greek debt-restructuring saga. The news on March 9 was that Greece had managed to reduce its obligations and extend its term structure via the proposed debt exchange, which obviously reduces short-term pressures and fears of a "messy" default.

That news, however, was sort of a nonevent for European debt and equity markets, while our stock market was boosted by the March 9 jobs number, which, at 227,000 jobs added, was about 17,000 higher than expected. In addition, January's total was revised upward by about 41,000 jobs.

I continue to believe that the employment data look better than the underlying reality, thanks to the fact that the seasonal adjustments can't possibly capture this winter's weird (and warmer) weather. That is in addition, of course, to the usual questionable assumptions that the Bureau of Labor Statistics uses in its calculations.

Sine of things to come?

Some of that "underlying reality" came to light the night before (March 8), when Texas Instruments (TXN, news) lowered its guidance, although the market completely ignored that. It is just one company, but I bring it up because I think it demonstrates that expectations are too high. I would not be surprised to see other companies forced down the same path, and I have a hard time believing that stocks have discounted that eventuality.

Image: Bill Fleckenstein

Bill Fleckenstein

This week brought more optimism, with a liquidity-fueled, momentum-driven romp in the U.S. stock market on Tuesday. The only skunk at the garden party was China, as its equities were clipped for 3% or so on Wednesday after Premier Wen Jiabao offered comments following the annual National People's Congress. Wen made it sound like there would be no additional easing anytime soon -- which is preposterous. As soon as we see any material weakness in China, there will be plenty of money printing and reserve requirement cuts, but the day's focus was on the lack of Chinese liquidity.

However, commodity markets bore the brunt of the reaction during Wednesday's session, as equities are in "see no evil" mode. That is quite a contrast to August, when folks were terrified. I remember at the time trying to figure out some way to actually get long the Standard & Poor's 500 Index ($INX) for a trade, because I felt folks thought the world would end in Europe, while I believed the European Central Bank's long-term refinancing operations were the functional equivalent of money printing. I never could find a way to capture that idea, even though it turned out that LTROs obviously are money printing.

Swinging for the fences

I bring that up to show just how fast (i.e., six months) sentiment can swing, and how far, because I don't think we are past the point of seeing people panic about the problems we all know still exist. Those who find themselves superbullish on the U.S. need to consider what the economy and bonds are going to look like when interest rates start to rise as the bond market takes the printing press away from the Federal Reserve (i.e., we experience a funding crisis and have trouble financing U.S. deficits).

Granted, that is not today's business. Even though the bond market is acting like it actually may have made a peak, stock bulls are clearly focused on "Goldilocks" once again -- the idea of a "not too strong, not too weak" economy -- as they seem not to have learned that that story is a child's fairy tale, not economic reality.

Looking for a moment to be shortsighted

In a column about a month ago, I noted my concerns regarding the bond market. In the intervening weeks I have wanted to add to my small-bond short position, but I was afraid the stock market was ready for a tumble and wanted to see how bonds behaved in the wake of that. Obviously, stocks have not tumbled, so by being wrong about the near-term direction of equities, I not only cost myself a modest amount of money (with a failed S&P short), but I missed adding to my bond short.

At some point, the stock market will be under pressure and it will be important to see how far bonds can rally. I am really looking to press my bond short now. As a resident of this country with young adult daughters, I can't root for the funding crisis hard enough, since it will finally put the idiot central bankers in a straitjacket and force us to deal with our problems like grownups .

Gonna take a sentimental journey

The metals markets were tagged again this week, and gold stocks were even weaker. I believe we are near a moment in time where the metals and the miners will set up for a decent upside trade, just as we saw in December. Sentiment is back to about those levels, and I suspect the futures market liquidations have been of a similar size (though we won't have those data for some time). Ideally, we would like to see some sort of reversal in the metals and miners where they move up in unison.

In talking with my friend, the always insightful Fred Hickey, on Wednesday, I learned that he had recently sold a bunch of mining stocks. But based on the sentiment and data currently available, he felt he couldn't afford not to add back a chunk of what he had sold, which he did. He plans to buy more into any further weakness.

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His feeling is that we have seen a large degree of giving up, leaving sentiment near where it needs to be to replace his holdings.

As for me, I haven't added to my positions just yet, but I am likely to do so shortly. Certainly, days like Tuesday and Wednesday are frustrating for gold bulls, when the world seems to say, "Who needs gold? We have Goldilocks." Even though believing in fairy tales is an absurd and failed investment strategy.

At the time of publication, Bill Fleckenstein owned gold.

This column is a synopsis of Bill Fleckenstein's daily column on his website, FleckensteinCapital.com, which he's been writing on the Internet since 1996. Click here to find Fleckenstein's most recent articles.