Stress Test Results Will Be Worthless

Includes: DIA, SPY
by: Craig Brown

The stress test white paper many were eagerly anticipating is perhaps not quite what they expected or wanted. By most accounts it is worthless. Accordingly, we need to await the actual results on May 4th. Let me give you a secret - they will be worthless too. Just giving you a head start on what to expect.

Cautious Optimism in the Headlines

Lately headlines have been a bit more upbeat but not 100%.

First, let's start with the administration, which had a bit less positive spin. Its head economic guru, Summers, sees the bad times keeping their grip for a bit longer than most others seem to now be forecasting. I think his prediction is light, but better than many others predicting we have turned the corner.

Next, on the positive side, banks - flush with taxpayer money (and with a gun to their heads) are lending to each other again. Funny how the government basically guaranteeing their solvency gets the credit flowing again.

Another bright spot is that inventory levels are down. That bodes well for the future - at least at some point.

Overall, I admit these are cautiously optimistic signs. But for foreclosures, job losses, housing not at a bottom and all those other countries out there sucking wind, I would think we were at a bottom. Not there yet in my opinion, but definitely closer.

Disclosures: None.

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