Stocks start spring strong

The recession is over. That was the thinking that propelled stocks upward yesterday. It continued on in Asian & European markets which had strong rallies, bringing even more buyers in the US today. Less bad economic news yesterday signaled (to buyers) that the economy is bottoming & the upswing will begin very soon. Dow rose 231, advancers over decliners 8-1 & NAZ was up 56. The only decliners in the Dow were the drug related: Johnson & Johnson (JNJ), Merck (MRK) & Pfizer (PFE).


Banks joined in (or led, depending on your perspective) the rally. The S&P 500 FINANCIALS INDEX is up but is still shooting to go over the 138 peak reach on Jan 28.

Value 126.91

Change 4.82

% Change 3.9%

Everybody's a winner today. MLPs & REITs are up 2 each, junk bond funds are strong while VIX pulled back 1 to the 41s (low end of its range in 2009).


Oil rose sharply on the euphoria about stronger worldwide economies.

CLK09.NYM

...Crude Oil May 09

....51.87

... 3.48 .......(7.2%)

The weekly jobless statistics were gloomy once again. Last week 669K workers filed new unemployment calims, up 12K form the prior week (which was already an ugly number). The 4 week average, less volatile, is 657K, the highest in 26 years. The number receiving unemployment benefits increased to 5¾M, the 10th consecutive weekly increase to yet another record. An additional 1½M receive extended unemployment benefits under a program passed by Congress last year.

• New jobless claims jump unexpectedly to 669K- AP

With all these layoffs, consumer credit is going from bad to worse. Consumer loan delinquencies keep rising & this year's numbers should worsen:

Q4, 2008....3.2%
Q3, 2008....2.9%
Q4, 2007....2.6%

• Consumer loan delinquencies rise in 4th quarter- AP

The bankruptcy of General Motors (GM), above 2, now is taken for granted in the markets. They've come up with a new term, "surgical bankruptcy." But the terms are just words. This will involve a lot of pain for shareholders, bondholders & workers. A bankruptcy could bring an end to the union as a new GM would be able to hire non union workers at a lower cost to GM. The bigger & stronger suppliers may survive but marginal ones will probably be dragged down with GM. Banks which have become the new financial darlings in the last month will have to write down their auto related loans (auto & supplier companies, auto dealers and employees who are laid off).

•GM Use of Quick Bankruptcy to Survive Likely to Encounter Surprise, Delay


With today's gains, the Dow is pushing on the 8K ceiling. If that resistance gives way, Dow could stay on its winning ways for some time.


Dow Jones Industrials --- YTD