April Is A Sideways Month

Another see-saw day for stocks; bottom line is April is mostly a sideways month, with the major indices in a fairly narrow trading range.

Stocks did rise a bit mid-day as President Obama finished his meeting with credit card executives. Some credit card stocks like Capital One rose immediately, primarily because the President did not trash them to the level that some thought he would.

He did, of course, call for reform, called for them to stop unfair rate increases, but all that was as expected.

Not that credit card companies have anything to celebrate. Capital One reported earnings well below expectations, and noted that there will be more charge-offs coming.

American Express is out right after the close, and the news isn't that much different. We know that gas prices are weak, Easter is in April, and spending trends are down. I have seen estimates of total billed spending down 12 to 15 percent.

Still, despite continued tough news on the consumer, stocks have held in this week with only modest losses.

There's clearly a bet-for the moment-that we might be at a bottom. The problem is, a bottom can last for a long time, and that is what will likely prevent stocks from advancing.

Look at what the employment losses have done to HMOs. HMO Wellpoint said they lost nearly 500,00 members since the end of December, mostly due to job losses.

And bottoming out in housing isn't going to help us; we need some signs of a turnaround. March existing home sales don't show signs of getting any worse than earlier in the year, but the market is not going to improve until we work off that 9.8 months supply of unsold homes. Hasn't budged this year!

As for the interminable bank stress test, the only good news is that it will soon be over. We are expecting information on what methodology is being used tomorrow.

Most financial traders I have spoken to are sure about only a couple things:

No one will "fail" BUT some:

1) will be forced to raise capital

2) make management changes

At least one-and likely two-bank CEOs will lose their job, almost everyone believes.



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