The Recession Is Over

The large drop in the jobless claims number supports the notion that the recession is over. Every other major recession has seen its end marked by a large drop in the jobless claims figures. So while Q2 will likely be a small negative figure for GDP, I think the odds have gone up that it will be the last negative quarter of GDP for this recession.

We will only now with hindsight, when the NBER officially declares the end of the recession, but you know where I stand. And this opinion differs widely from many Wall St. strategists, who think that we could continue to see negative GDP quarters into Q1 of 2010. They will be wrong.

Many of the same-store sales reports for retailers also came in less bad than feared, which is helping boost those stocks and adding to the notion that maybe the consumer is starting to peak her head out of the cave. Wal-Mart posted strong results, but said that it will no longer issue monthly sales figures. I hope that isn't a trend that gets widely adopted.

The govt. will release the bank stress test results after the market close today, but so much of the news has already been leaked out that I don't expect it to be a huge market moving event. JPM, GS, MET, AXP, BK, and COF were already indicated to have adequate capital levels. And the companies that were indicated to need more capital still saw their stocks go up! Go figure.

Tech stocks are leading the downside this morning, despite Cisco (CSCO) reporting better than expected results and raising guidance. Maybe this is just profit taking after a huge run in the market, but watch out when stocks start falling on good news. That would be a change in character.

The ECB cuts its interest rate 25 basis points to 1.00%, as Trichet acknowledges that inflation is likely to be contained. The Bank of England said it will step up its asset purchase program by 50 billion Pounds. And Japan's stock market surged +4.6% after being closed for a string of holidays.

The 10-year yield is higher to 3.24%; the dollar is weak so far, helping boost commodities, oil, gold, and the Baltic dry index; and the VIX is higher today to 33.75.

Trading comment: Could today be day one of the pullback? I hope so. I certainly don't root for the market to go down, but I would like it to rest a bit and catch its breath. This would give me a chance to put some cash to work before another push higher which I still expected.