Measures of fear such as the VIX and swap spreads are falling, and that is very good news since it reflects reduced systemic risk and improving fundamentals in general. Equity prices have bounced from their recent lows, but appear to be lagging the improvement in these key indicators however. Perhaps it's just because this is a holiday week, or perhaps the market is still trying to digest the news from the Obama camp. I detect very little enthusiasm (and rightly so) for Obama's big plans for fiscal stimulus, but his nominees are not crazy people who are likely to do stupid things. More information is needed.
John Tamny has a good article which explains how all the command-and-control in Obama's plans have dampened investor enthusiasm, and he also offers sensible suggestions for improvement. Obama needs to reflect some more on what sort of fiscal plan makes the most sense and triangulate accordingly. With all the smart people lining up behind him, you would think they could figure this out. I hope so.