In this morning's Breakfast With Dave, Rosie explains how as the S&P continues its bull rally like that of years past, retail investors are seeing a flight from equities and money market funds into bonds due to the volatile nature of the markets.

Income has officially become more important than taking big risks it seems.

Breakfast With Dave: The bottom line is that even after the low-volume rebound in that past couple of weeks, the S&P 500 has done nothing over the past five months as it puts in a topping formation that is highly reminiscent of what we saw in 1987, 1990, 1994, 2000 and 2007. The retail investor continues to take advantage of any whippy rallies by selling into them and re-balancing into the fixed-income market in what certainly seems to have become a secular shift towards income and away from risk-taking capital appreciation strategies.

Stock funds suffered a net outflow of $5.6 billion last week — $5.2 billion from U.S. funds and $400 million was withdrawn from foreign equity funds. True to form, bond funds took in a net $6.8 billion after $7.8 billion of net inflow the week before. It is fascinating to see where this so-called ‘mountain of money’ the equity bulls talk about incessantly is being put to work seeing as money market funds saw redemptions of $39.7 billion last week. They are going into bonds.

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• Rosenberg: Here's Why The Correction Isn't Over
• Rosenberg: Forget The "Flat" Pending Home Sales Number, Here's The Real Disaster
• Rosenberg: This Is A Real Correction, S&P Headed To 912

The full details are here at WhiteHouse.gov. Below are some specific themes.

This is very much a post-Scott Brown proposal. Look at the words the White House chooses to bold "affordable," "market,", "budget." And there's a hefty dose of tax cuts in there, for both individuals and small businesses.

The proposal will make health care more affordable, make health insurers more accountable, expand health coverage to all Americans, and make the health system sustainable, stabilizing family budgets, the Federal budget, and the economy: 

• It makes insurance more affordable by providing the largest middle class tax cut for health care in history, reducing premium costs for tens of millions of families and small business owners who are priced out of coverage today.  This helps over 31 million Americans afford health care who do not get it today – and makes coverage more affordable for many more. 
• It sets up a new competitive health insurance market giving tens of millions of Americans the exact same insurance choices that members of Congress will have.  
• It brings greater accountability to health care by laying out commonsense rules of the road to keep premiums down and prevent insurance industry abuses and denial of care.  
• It will end discrimination against Americans with pre-existing conditions.
• It puts our budget and economy on a more stable path by reducing the deficit by $100 billion over the next ten years – and about $1 trillion over the second decade – by cutting government overspending and reining in waste, fraud and abuse.

Summary Presidents Proposal(2)

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• Obama Switches To Healthcare Reform Plan B: Price Controls
• Premium Health Insurance Is Overrated, And Most Folks Would Be Fine Just Paying For Healthcare Out Of Pocket
• Look How Much Better The Deficit Would Look If We Only Solved Healthcare

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NEW YORK (AP) — The Canadian investment firm that paid $1.68 million last year to win lunch with billionaire investor Warren Buffett is about to collect its prize.

The proceeds from Buffett's annual charity lunch auctions benefit the Glide Foundation, which provides social services to San Francisco's homeless and poor.

Buffett plans to dine with Salida Capital officials on Monday at the Smith and Wollensky restaurant in New York.

Salida Capital paid less than the previous year's winner who plunked down $2.1 million to meet with Buffett.

Buffett, who is Berkshire Hathaway's chairman and CEO, is renowned for his investing success.

But Buffett is also known for his plan to gradually give most of his roughly $46 billion fortune to five foundations over time.

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• Warren Buffett Snubs Foreigners At Annual Shareholder Meeting And Steak Night
• Buffett Sells Down Energy Stocks, Pours Into Defensives
• The Phone Of Warren Buffett's Hedge Fund Cutie Cara Goldenberg Has Been Ringing Off The Hook Today

California attorney Wajahat Ali has written a chronicle of how he helped a couple in Sacramento defeat expert stonewalling by Wells Fargo and finally got the bank to modify the couple's mortgage.

The story is revealing on many levels, especially the lengths banks will go to to make those who want a mortgage-mod just give up.

In the end, Wajahat won.  Wells Fargo slashed the monthly payments for his clients and let them keep their house (at least temporarily).

What was Wajahat's secret?

He played the litigation card and threatened two things:

1. Filing for bankruptcy, which would delay the foreclosure process and stop ANY payments on the house.
2. Suing the bank for violating mortgage-origination laws by allowing his client to just sign a piece of paper saying he made $25,000 a month when he actually made $26,000 a year (Yes, Wells Fargo probably would have had a good counter-case that this was mortgage fraud, but they also had a duty to make sure the borrower could pay).

The full chronicle is available here, at McSweeney's. 

And here's are some highlights, with a link to the full story at the end >

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• Finally Some Mortgage Modifications Are Actually Beginning To Work
• Yes, It's Okay To Walk Away From Your Mortgage
• How To Walk Away From Your Mortgage And Save Thousands Of Dollars Per Month

After a few weeks of caution -- which he called -- Saut is bullish again.

Setting the stage for the stock market’s reversal has been relatively constructive economic data implying that the first revisions of 4Q09 GDP (due 2/26) are unlikely to be major, a Greek Gotcha that appears to be on simmer, a Chinese New Year that has closed their financial markets, also putting on simmer near-term worries of further monetary tightening, and a host of other Street-friendly figures. Meanwhile, momentum traders, speculators, and model-driven players have been buying U.S. dollars, which suggests another change in the trend since stocks rallied right in the face of a stronger dollar. Even more surprising was crude oil’s spurt, as well as gold’s weekly climb, given the “buck’s bounce.” Indeed, counter intuitive as it seems given the greenback’s strength, the strongest sector last week was Basic Materials, which gained an eye-popping 5.02%.

Also of interest, at least to us since we are “long,” is that Japan’s economy expanded at a faster than expected 1.1% in 4Q09. Despite all of the negative nabobs, we continue to like Japan for a multiplicity of reasons. Apparently, so does Byron Wien, vice chairman of Blackrock Advisory Services and former chief market strategist of Pequot Capital and Morgan Stanley. According to Byron, “Japanese stocks will be the best investment among the world’s biggest markets.” He goes on to note, “Everybody who could
sell Japan has sold Japan. Everyone is on one side of the boat.

My view is that we have a pretty good chance of having this one be the best of the major industrial markets. It’s not a boom, but things are getting better.” Obviously we agree and have been recommending tranching into the Japan Equity Fund (JEQ/$5.33) and Japan Smaller Capitalization Fund (JOF/$7.78). As the savvy
folks at the GaveKal organization opine, if China can change its business model from one of “labor productivity” to one of “capital productivity” (to gain more efficiencies on capital), it is hugely bullish for Japan because Japan does more business with China than it does with the United States.

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• It's Not Just Greece, Now They're Going On Strike In "Rich" Europe
• "If The US Can Do It, So Can We": Japan To Keep Pumping Cash And Monetizing Debt Until Deflation Goes Away
• Japan Quickly Heads Lower After Bernanke Officially Commences The Tightening Cycle

Hedge fund manager Stanley Fink and Larry Hite launching a new fund says FT.

Scared after a stroke revealed a benign brain tumor, Fink quit finance in 2005 to work for charity. He soon re-emerged to launch International Standard Asset Management (ISAM) in 2008.

ISAM is a small hedge fund that's about to get much bigger thanks to a new partnership Fink apparently struck with Larry Hite's Hite Capital Management.

According to the Financial Times, the two plan to launch ISAM Systematic. Their aim is to raise $6 billion by the launch date, which is said to be set for April. Hite will fun the fund as a director and also be a shareholder.

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What's more, he says that it really does not matter what Iran says or does. It is not a nuclear power any more than Iraq was a hotbed of weapons of mass destruction. The only thing holding back an attack on Iran is the lack of public support in the US and Europe. If the public's mood changes, we're going to war, Chossudovsky says.

(Hat tip: LewRockwell.com)

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• Iran Offers Up Huge Natural Gas Bribe To China To Stave Off Security Council Sanctions
• Threatened Sanctions Against Iran Is Proving To Be Another Wedge Between US And China
• Why The New Congressional Threat To Iran Is A Huge Gift To Russia And China

We know they're going on strike in Greece to protest "austerity" but the fever is spreading into countries like France and Gernany, where governments are being asked to bail out Club Med.

First in Germany, the big Lufthansa strike is definitely on. It's just a four-day strike, but already thousands of flights have been cancelled, causing havoc across Europe (if you're a business traveler, don't say we didn't warn you, because we did).

Now in France there's a big Total SA strike which could have a big impact on oit output.

Anyway, going back to Germany there have also been sporadic public-sector strikes throughout the month. When these workers see their governments bailing out Greece, as opposed to giving into much-requested wage hikes then watch out.

Have fun sleeping in the airport.

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• Greek Unions Strike To Stop Spending Cuts Aimed At Ending Debt Crisis
• Awesome Timing: Greece's Biggest Union Goes On Strike
• Doing Business In Europe? Get Ready For Sheer Chaos Next Week

From mpettis.com:

It is a real toss-up as to which generates more bizarre comment in the international press: Beijing’s long-feared dumping of US Treasuries, or the use and value of the PBoC’s central bank reserves. 

The revelation last week that Chinese holdings of US Treasury obligations fell in December by $34.2 billion, to $755.4 billion, generated a frisson of fear and excitement, leading one prominent newspaper to worry that “If there is one thing that gets investors twitchy, it is the fear that China is losing its appetite for US government bonds.”

And shouldn’t they get twitchy?  After all this reduction in Chinese holdings of Treasury bonds comes from the USG’s TIC data, so it must be true that China is dumping dollars, right?

Read the full post at China Financial Markets -->

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• China's Treasury Dumping Is The Equivalent Of A Nuclear Weapons Test
• David Goldman: China's Dumping Of US Assets Means A Coming Spike In Borrowing Costs
• The Dumping Begins: Chinese Reserve Managers Notified That Any Non-USG Guaranteed Securities Must Be Divested