Thursday’s action came as a surprise.  Helped no doubt by the expiry of the April options.  Still the news is not good except for the banks.  The DJIA managed to gain 224 points to once again make it above 8,000.  The S&P500 added 30 points to hit the resistance level of 850, while the FTSE could only manage 57 points and is still 70 odd points away from the 4,000 resistance.

I have said before it was the consumer that really caused the problems, spending money they did not have on things they did not need.  In many cases with no hope of repaying the loans if housing did not continue to go up.  Even less chance of staying afloat if a job was lost.

The gain in the most part was from a change in the “mark-to-market” rules.  This takes pressure off the banks need for capital and releases money for loans.  But here is the catch, both banks and consumers are “gun shy” or “once bitten, twice shy”.  The banks have tightened up loan conditions, and the consumer does not have the desire to dig a deeper hole for themselves.  US consumer spending fell 2.4% in Q2 according to shopper trak.  Then there is the news of two more bank failures in the US, bringing the total to 23 this year.  Initial unemployed came in again at over 650,000, though it did show an improvement on the previous weeks revised figure of 674,000.

All is not well with the car makers either.  It is looking even more likely that Chrysler and GM will finish up in bankruptcy. More companies report on their earnings this week.  We are nearing the traditional “sell in May and go away” season as well.  The next couple of weeks will be interesting.