Last week's rally was fueled by a coordinated announcement from Citigroup, Bank of America and JP Morgan Chase telling us that their banks had been profitable for the first two months of the year. Well, who would ever doubt that their businesses are profitable?
The problem is their balance sheets, not their income statements. And until they or the US Government know how to deal with the inflated asset values, the rally will likely be short lived. Changing the rules may help but then again we must realize the potential long term consequences of changing the off-side rule in the middle of a ball game. The referee will easily end up playing the game all by himself.
Wednesday - UK unemployment. Short GBP?
Thursday - application of 1st phase of TALF fund closed. This works exactly like an increase in the spending limit of an already maxed out credit card. Should help in the short term.
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