Bottoming out

What a week we've had. Euphoria overcame everyone during the stock surge of Wed and Thur this week.

Stocks ended the fourth week of gains. Currencies made huge moves to reflect fundamental changes in the economy. Will blog on this later.

I think we're seeing some sure signs of bottoming in this economic crisis. Things aren't so much better than where they were in late Q4 or Jan -Feb, but I think the market has been trying to price in the worse.

But let's leave GM bankruptcy for another time.

Here are the whys for the bottoming argument:

Tue - Japan's Feb Tankan was very bad. But manufacturing showed a clearing out of inventory, which points to bottoming out. Some large Japanese companies are expecting a pick up in orders from as soon as Q3

Thur - G20 members agreed to double IMF's its kitty to USD 1.1 trn, USD250 bn for trade financing, USD 250bn worth of new SDRs and USD 100 bn to aid economies that need financing. G20 leaders put in strong words to agree to stop the rot in developing economies, hence lifting fears of more loan writedowns. If this comes to fruition, then confidence in the EZ will climb.

US ISM improved, with New Orders showing a strong move higher. Pending Home Sales better than expected. All these tell you the worse numbers might have already been published.

Fri - Non Farm Payrolls (US unemployment rate) coming in line with expectations (u/e rate at 8.5%). The market was worried about a more drastic deterioration.

EZ manufacturing indicators also showed improvement across the board. EZ CPI supported - indicating risks of deflation is contained.

Early signs of stabilization? I sure hope so. Even if it is true, I think I the bottoming process will take some time to pan out because of continued deleveraging and confidence in not yet back in the market, albeit the recent stock rally.

And I think next quarter should not be much worse than this.