Thursday, April 16, 2009

As Bad As It Gets?

More and more analysts are coming over to our position which is that the worst of recession is behind us and that recovery lies not far ahead.

That bull stock market rally in a bear market is looking more like a real bull. Still, cowboys don't seem to want to ride it. Skepticism abounds. But hope is gaining on it. 

Banks are still fragile and I do not write off their risk. But I am less concerned with the Fed on the job and with so many lending facilities in place. It's a patch-work quilt, but it's a warm one. So the banking sector improvement is good news,even if it is not uniform. Some banks may be exaggerating their health. Others are just bristling to get Uncle Sam off their balance sheet so they can write big bonus checks again. But with all the government help out there, including debt guarantees, I think some banks are just a bit too quick to repay TARP funds, a bit too greedy, a bit too much like old times, and still flirting with too-big-to-fail issues. Bankers need to lean some humility.

For all its brain power Wall Street still does not seem to get it.  The rush to get back to their check books could be their undoing. I wonder if anyone else wonders about those protesters with the pink banner and dollar signs on it?  How did they crash these  high level meetings so easily? Wasn't it convenient for Goldman Sachs that wants to repay its TARP to have 'protesters' on the stage railing for their money back when this is exactly what Goldman wanted to do ever since the worst of  the storm passed? Am I the only one who wonders about that?  

Jobless claims have dropped sharply but in a holiday-shortened week. The data are seasonally adjusted- the day count is not the issue-  but the adjustment is hard to do. Easter is an especially vexing holiday because it  is not fixed on the calendar, being a creature of the lunar calendar, not the Gregorian. So you get many more different Easters than say Christmases. There is already some suspicion that Easter and the cold weather combined to supress retail sales. 

But it is jobless claims that are the most intersting since claims usually spike and peak out close to the end of recession. The average count after a claims peak to the end of recession is eight weeks.  We are already making that count since the large drop in claims makes it look like the peak came two weeks ago. Relly? Six to go for recovery? Could be... 


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