The media needs to calm down

Since the past few days, a lot of good news has been thrown on the financial papers. The Yen is coming back strong against the US Dollar breaking the 94 mark at Friday close. This is good comeback from a 3 month low reached just over a week ago. Manufactiuring news from the US and China is positive. The Indian markets were rallying a few days ago boosted by Realty and Metals. Singapore reported 20.4% GDP growth (annualized) from April to June. Japanese central bank also said that the worst of the recession is over. And of course, who can forget the blockbustre results by GS and a strong JPM performance. This prompted several media channels to paint a bright and rosy picture misquoting econmists such as Dr. Roubini et. al. This further triggered market rallies in the US. You just needed to see the markets section on any internet newspaper over the last few days and you would see green.

But as points out, what these media channels are hiding are Dr. Roubini's views that this recession is a U shaped one instead of V-shaped recessions we've seen in the past. So the recovery would be slow and challenging. Over 75% of US corporate results disclosed have beaten the analyst forecasts but it should be realized that these are boosted by inventory liquidation and reduced labour cost. The question we should be asking is that, is this rally sustainable? The Citi and BOA results yesterday should calm the media frenzy a little. Both posted quarterly profits but if it weren't for one-off gains (Citi divesting Smith Barney and BOA selling its stake in China Construction Bank), these behemoths would have been in the red.

There are some good signs out there for sure, but let's not get carried away.