Lifting the Veil on Closed-End Funds

It's not just about the Federal Reserve bailing out Wall Street, though that certainly helped. It's about the rest of the world moving on, supplying overextended banks with the replacement capital they crave but otherwise getting on with its development boom, to the delight of various U.S. suppliers.

This global resilience and the abundant cash on corporate balance sheets have led many large companies to run their businesses as usual, making only the sorts of cuts that would make sense in any economic climate. This, in turn, has forestalled the sort of pink-slip blizzard that would kick the credit crisis into another gear, driving up the unemployment rate and credit-card defaults.

Thanks to the outsourcing of the recent years, the labor market is less cyclical than ever — not that its current state is anything to crow about. But it could have been a lot worse, and the gains since the Ides of March simply acknowledge that the worst case hasn't come to pass.

The U.S. consumer is still screwed, of course, caught between escalating food and gas prices and the sort of job market in which no employer needs to get into a bidding war. We've responded in our customary fashion, by letting credit-card balances grow. But consumers elsewhere are only just warming to our brand of materialism, and they're much further from their credit limit than we are from ours.

Stock markets know the score: The Brazilian Bovespa is up 13% over the last month thanks to a national credit upgrade, and set an all-time high Tuesday. Canada's TSX Composite notched a new record Monday. The Russian RTS is up 12% since May 5. New York has generally brought up the rear in this race, though it hasn't quite gotten lapped yet. And even the bleak domestic landscape hasn't stopped most techs, industrials or commodity suppliers. Energy stocks are up better than 7% since I plugged them two weeks ago, despite a clear downturn in U.S. demand.

Easy come easy go of course, and there's been precious little evidence that the general public is falling for claims that the bull is back — that's simply too hard a sell given the mood out there. The most recent gains have piled up on very low volume, implying a dearth of sellers more than an abundance of buyers.

The news flow from here gets tougher as generally comforting earnings reports give way to more grim news for housing and the heat of the presidential campaign. The rebates are as good as spent. Having argued recently that things for stocks are looking up, I feel startlingly little enthusiasm all of a sudden to chase the market here.

What I am feeling newly enthusiastic about is dividends, dividends generous enough to keep up with the cost of gas. This has sent me trawling through data on closed-end funds, which are almost as unpopular now as they were during the tax-selling season last December.