2009-06-05 04:58:17
By Jamie Robertson
Business presenter, BBC World News
The day the Dow and the S&P 500 and the NASDAQ hit bottom - 9 March - the IMF Managing Director Dominique Strauss-Kahn said we were in a "global financial crisis that might now be called the great recession".
Almost three months later and the mood music is very different: the markets are enjoying a hearty bull run, bond yields are rising to "normal" levels, and there are mutterings of a V-shaped recovery.
Since the beginning of the year the S&P 500 has risen 15.6%, and the Nikkei is up 10%. T
The FTSE has been something of a laggard, but is still only down 1% .
It is a triumph of hope over reality
Justin Urquhart Stewart, Seven Investment Management
The emerging markets have done even better with Russia up 79%, Taiwan up 50% and the Shenzhen index in Shanghai up 66%. Even Ukraine, where GDP could fall by between 9% and 12% this year, saw its equity market gain 51% from 1 January.
Stephen Pope ,chief global market strategist at Cantor Fitzgerald, pointed out that the FTSE hit its low point on the 3 March a little before the US markets.
Since then (despite its fall since 1 January) it has gained 27%. He believes could hit 5000 this year.
At the end of May it "closed above its 200-day moving average, although it finished shy of the high seen in the October and November rallies. Last week was a bout of profit taking - that is all. It was not the end of the rally. The FTSE is set to make further gains," he says.
Oil price optimism
Perhaps the best indicator of the renewed optimism is the oil price.
The markets now seem so convinced that the world is going to need ever more barrels of oil (never mind the shiploads lying around the world in stationary tankers) that it pushed the price up almost 30% in May - the steepest rise in ten years.
The beneficiaries are not the big oil companies: Shell, BP, Total and Exxon gained between just 2% and 6% over the month.
But some of the smaller operators have benefited: Tullow Oil, Cairn Energy are both up some 20% in the UK in May. In Norway, Aker Solutions, and Seadrill, which provide oil facilities, both rose around 30%.
But opinions are sharply divided.
Justin Urquhart Stewart of Seven Investment Management is unconvinced in the general optimism.
"It is a triumph of hope over reality.
"One never knows when one is at the beginning of a bull market but if you look for solid underlying facts to back up the optimism they are not there. Some companies are paying increased dividends but all of them have very weak forecasts indeed," he says.
He is even more scathing of the emerging markets.
Indeed the Chinese government itself, which has provided some of the few bight economic spots over the last two months, admitted that the foundations for the economic recovery are far from solid and that trade faces "unprecedented difficulties".
GM Bankruptcy
The month has been dominated by the fate of Chrysler and GM, whose respective bankruptcies have been like watching the proverbial, and inevitable, car crash played out in slow motion.
And when the crashes did finally come, the markets greeted them with an enthusiastic, if unbecoming, surge.
If markets dislike uncertainty, by implication they enjoy certainties, and a bankruptcy certainly provides some of that.
What has not been felt yet is the economic ripple effect, which will filter through the global economy in the months ahead.
These range from the closing of plants to the sacking of full-time and casual workers through to the loss of vital advertising revenue for local newspapers and radio stations.
There will be other unforeseen effects too, all of which will weigh down the jobless numbers for much of this year - and a real recovery.
Good results
In the end though there are some companies that are producing good figures.
Witness the difference between Virgin Atlantics results (an almost doubling of profits) and BA's (its first full year loss since 2002).
So also the Dow's performance since the beginning of the year (down 1.8%) has been utterly outclassed by the 14-15% rise in the S&P500 and the NASDAQ.
The reason for the disparity lies in the big losers on the Dow: their names read like a roll call for the credit crunch victims - Bank of America, Citigroup, Caterpillar, General Electric, and General Motors (now thrown out of the index after its bankruptcy, to be replaced by computer firm Cisco Systems).
Whether the NASDAQ winners are worthy and sustainable successors is another matter altogether.