Fed chief Bernanke says we are seeing "green chutes" of economic growth, President Obama echoes that notion but warns there is still more pain ahead. A couple of these green chutes are growing from seeds of lower than expected new jobless claims and higher than expected consumer sentiment. The jobless claims still spell trouble ahead however as it is still north of 600 thousand. Some economists see the unemployment rate continuing to rise into 2010, even if the recession officially ends this year.
Goldman Sachs, JPMorgan Chase, Wells Fargo, and Citigroup have all trumpeted very strong earnings for the first quarter. There are caveats to these earnings however. Most, if not all, of the gains have arisen from trading activities while credit losses still mount even though the accounting rules have been relaxed. Continued profits from these activities are highly unlikely to be sustained going forward. Credit losses on the other hand will probably continue as foreclosures are beginning to mount among even good (non-subprime) borrowers. MIT professor Simon Johnson posted a good commentary on these bank earnings on his blog The Baseline Scenario. Read it here - http://baselinescenario.com/2009/04/16/new-day-new-bank-same-story/
Equities:
This week marked the sixth successive weeks of gains for equities. The Dow posted a 0.6% gain, the S&P500 climbed 1.5% and the tech-heavy Nasdaq rose 1.2%. Year to date the Dow and S&P500 are both down (7.4% and 3.7%, respectively), but the Nasdaq is up 6.1%. REIT stocks posted the strongest gain this week, up 5.5%; an interesting climb considering that General Growth Properties filed the one of the largest real estate bankruptcies in history on Thursday. Other strong performing classes included European stocks, up 4.7% and US corporate junk bonds, up 4.0%. This week's laggard was crude oil, down 3.7%.
The IPO market received a jolt Friday as Rosetta Stone, the language instruction provider, surged 40% on its first day of trading. Shares priced at $18 before trading in the open market and then quickly jumped to over $25 Friday, and climbed even higher to close at $28.25. The IPO is just the fourth in 2009, but three of those have occurred in April.
Bonds:
The aggregate bond market was little changed from last week's close, with the Barclays Aggregate Bond ETF up 0.2%. Treasuries were also mostly flat, making up some lost ground late in the week. The 10-year yield was flat closing the week at 2.93%, whereas the 30-year climbed slightly from 3.76% to 3.79%.
Goldman Sachs, JPMorgan Chase, Wells Fargo, and Citigroup have all trumpeted very strong earnings for the first quarter. There are caveats to these earnings however. Most, if not all, of the gains have arisen from trading activities while credit losses still mount even though the accounting rules have been relaxed. Continued profits from these activities are highly unlikely to be sustained going forward. Credit losses on the other hand will probably continue as foreclosures are beginning to mount among even good (non-subprime) borrowers. MIT professor Simon Johnson posted a good commentary on these bank earnings on his blog The Baseline Scenario. Read it here - http://baselinescenario.com/2009/04/16/new-day-new-bank-same-story/
Equities:
This week marked the sixth successive weeks of gains for equities. The Dow posted a 0.6% gain, the S&P500 climbed 1.5% and the tech-heavy Nasdaq rose 1.2%. Year to date the Dow and S&P500 are both down (7.4% and 3.7%, respectively), but the Nasdaq is up 6.1%. REIT stocks posted the strongest gain this week, up 5.5%; an interesting climb considering that General Growth Properties filed the one of the largest real estate bankruptcies in history on Thursday. Other strong performing classes included European stocks, up 4.7% and US corporate junk bonds, up 4.0%. This week's laggard was crude oil, down 3.7%.
The IPO market received a jolt Friday as Rosetta Stone, the language instruction provider, surged 40% on its first day of trading. Shares priced at $18 before trading in the open market and then quickly jumped to over $25 Friday, and climbed even higher to close at $28.25. The IPO is just the fourth in 2009, but three of those have occurred in April.
Bonds:
The aggregate bond market was little changed from last week's close, with the Barclays Aggregate Bond ETF up 0.2%. Treasuries were also mostly flat, making up some lost ground late in the week. The 10-year yield was flat closing the week at 2.93%, whereas the 30-year climbed slightly from 3.76% to 3.79%.
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