The financial markets are caught between a rock and a hard place.  The sell off continues while there is no new reason for a buying spree.  The market needs a catalyst and quick, without much news the market will continue to stagnate with higher commodities prices and growing unemployed numbers.

The news that normally drives the market, for whatever reason, cannot be found.  Corporate earnings numbers are still weak, inflation is growing and the real estate market still contracting.  This market needs something to give it some boost.

In this case, if the Federal Reserve were to raise interest rates we might actually see a market rally.  Generally when the Fed raises rates the market tumbles but I think many traders would find it beneficial if the Fed were to raise rates to fight inflation.  This is what economists are calling for but the real estate issue is something that will never be cured with higher rates.  The Fed has to cut off the real estate market from handouts if we’re to ever see an overall market recover.
Invest in your own debt
It appears that the best investment right now is in your own debt.  You’re not going to pull but a couple percentage points from a money market or bank account so the best use for saved money is in your own debt.  Obviously credit card debt should be first on the list and is generally something that should never be accepted.  At rates as high as 29% per year on the subprime cards, its simply bad mathematics to be holding any amounts of credit card debt.

Next should be the auto loans.  This debt is important not just because of the higher interest rates than home loans, but because of the growing used car market.  If you own an SUV today, you’re looking at trade in values significantly less than what you would expect.  No one wants to buy a gas guzzler with $4 gas, the best bet is to eliminate your debt on the vehicle especially if you’re looking at an upside down loan.  The equity in your car should always exceed that of the rest of your loan.  If worst comes to worst, at least you’ll be able to dump the car and have some money to show for it after paying off any outstanding debt.

Rather than risk your money in a market that isn’t moving, the best option is personal finance.  Save some cash in an emergency fund or contribute to college plans.  Saving money at 2% interest just doesn’t make sense, let it work for you or work to eliminate debt.