Pre-Market outlook for May 18th and more! UPDATE

European markets are up in oversees markets going inot the open this morning. The Nikkei however lost over 200 points in overnight trading. Dow, Nasdaq and S&P Futures are pointing to an up market at the open helped along by several pieces of news. One piece of news is about India. The election win, of the party of the Prime Minister Singh's Congress Party, has resulted in the biggest gain in India's stock market. It gained 17% and the Rupee gained 3.6% while the Bond market declined sharply, as many Indians see more continued growth and prosperity under the ruling party, going forward. Trading was halted in their stock market because of the sharp surge in the Sensitive Index or Sensex. According to these news reports, markets are euphoric.

The other news is about 3 Month LIBOR rates. It is at the lowest level in a long time. According to news reports, "LIBOR has dropped more than two basis points for the past four days. The last time it fell so much was in the four days through Jan. 13.

Some measures show financial institutions are still wary of lending after banks racked up more than $1.4 trillion of writedowns and losses since the start of 2007."

Also reported in the same article was this little nugget of related news: "The drop in Libor has less to do with rising confidence among financial institutions than it does with surging customer deposits, Jim Vogel, an analyst at FTN Financial said last week. Deposits at U.S. banks jumped by almost $400 billion in the past six months, contributing to reduced demand for loans in the interbank market".

So it looks like the American Consumer has finally decided to save rather than spend. It is my view that this is a once in a generation shift in the mindset of Americans and this trend will not change for a very long time, just as it had affected the generation who lived through the Great Depression and Crash of 1929 and the 1930's. So don't be looking to Consumers to just go out and spend anytime soon. It is also worth noting that the Consumer is responsible for 70% of the growth in the economy. If there were ever something to worry about, this news tidbit is it.

The market may rise at the open today, because of the India news, but believe me this will be short lived. Today after the Bell, Lowe's reports earnings and tomorrow Home Depot. As Jim Cramer, of CNBC's Mad Money, has pointed out on his show last week, they are both over weighted in their footprints in Florida and California and will give a read on the two States economies. Heck, I can tell you things are bad in California and the State especially manifests these troubles as unless the Ballot measures approved by State Legislatures is approved by Voters in a Special Election tomorrow, the State will have to lay off thousands of teachers, sell prime property assets to private investors, and release tens of thousands of prisoners from jails, as it can't afford to keep them jailed.

Bad times are almost a given here in California as it has exemplified the Sub Prime problem in State government by always borrowing to help someone without thinking of how to pay for it. The latest read on the Special Election Ballot measures is that they will be defeated and the State will face draconian measures under Governor Arnold Schwarzenegger.

UPDATE: 8:15am PST

Market opened higher as expected. Lowe's announced earnings and they beat analysts expectations but Revenues were down over 6%. And while the stock is up $1.17/share to $19.62, there are concerns that they have not reduced their inventory fast enough to keep up with falling demand. So the question is will this be just a 1 or 2 day rally for the stock.

California Budget Gridlock: When are the people going to rise up?

The mess California finds itself in is every Californian's concern. And the answer to get out of this $14 Billion deficit requires regular people to get involved in ways we haven't ever before. In California and only 1 or 2 other States, it requires a 2/3 vote to approve the State budget. That is 67% of the elected officials voting in favor of the budget. We have been without a budget for many, many months and we now risk being bankrupt as a State. The legislature is within 3 votes needed to pass the budget, but Republicans, on ideological grounds, are opposing it. Does this sound familiar?

So what can we do as citizens of the State? Well, first we could all support a budget change to a needed 50% plus one majority to pass the budget. But that law can't get passed because the Republican minority wouldn't vote for it, as their power would be gone because California is predominantly Democratic and a Progressive State.

One thing not explored is what powers Governor Arnold Schwarzenegger really has to end this crisis. He has called a State of Emergency and the Legislature is meeting to try to resolve the problem but no one is budging on their positions and the stalemate continues. Reporters this morning are saying that small groups of non-government people are working behind the scenes to come up with some solutions. This is very good news if true.

But one thing that needs consideration is some local pressure from citizens in the communities where the 3 Republican votes are needed, and those vested interests need to abandon their ideological views for more pragmatic ones. Many people will lose their jobs and people need to care about all Californians plight with this budget mess. I for one, would be willing to pay more California taxes, as most Californians also would. For those Republicans who are tired of paying California taxes, leave the State and go find another home where you can have such a beautiful place to live but don't have to pay taxes. It's called Nevada! But no one really lives there.