Hurrah and huzzah! The credit crisis is over, it's all sorted, everything is fine and buying opportunities abound. No, I… … haven't had a moment of clarity on the road to a financial Damascus but I been told the credit crisis is no more and it is time to buy. Who are these prophets of glad tidings, uttering soothing words as they sally forth to convert the bears? Are these respected men who deserve to be heard? Are they “fishers of men” or bottom fishers?

I read their words and realise they are no fishers of men, moreover they are more likely to have had a stall in the moneylenders area of the temple. “Wait” you cry, “let me judge for myself, show me these words”. Of course I will, here you go, first up Dennis Gartman, yes that Dennis of the Gartman Letter:

“Our Int'l Index has fallen from its high of 10,300 to its recent low just under 8,000… a break of just a bit more than 23%. We can now say with some resolve that the lows have been seen. The panic that was the SocGen sell-off in mid-January, and the panic that was yesterday morning were the lows. Henceforth we shall be buyers of equities as weakness is to be bought rather than strength sold. We note this as a WATERSHED. Our long standing clients know that we say this rather rarely, and when we do, we mean it.”
I like Mr Gartman, he is good and one day I'd like to be as good as him. He has though made a fundamental error. Its not that he thinks the markets have bottomed, or that he sees a buying opportunity, he might be right, who knows? It is much simpler than that. He is judging market conditions on the size of a drop in an index.
Think about it, how many times have you seen and heard this recently: “a bear market is defined by a drop of 20% from the peak”? The keyword is defined, not completed. I could go on and question the definition but I haven't the space in this article, as long as you have thought about it, job done.

There is more that one prophet of glad tidings roaming the financial landscape today. This one is much more worrying. Here is part of an email I received today from Citywire:

Credit crisis over says top fund manager
By Danielle Levy | 14:50:28 | 02 April 2008

Bill Miller of Legg Mason Investment Management believes the Bear Stearns bailout two weeks ago marks the end of the credit crisis.

The manager of the Legg Mason Value Trust, Legg Mason Value A Dis A USD and Louvre Gestion's America Value funds says that on hearing this news he 'put fresh money into the pot', namely his own funds, which he admits is something he rarely does. He says that the Fed's opening up of the discount facility to investment banks has allowed spreads to come in, leading to a rebound in financials.

Miller and co manager Mary Chris Gay are currently overweight financial services, technology and consumer discretionaries. Within the financials sector Miller singles out housebuilding stocks as an area he is investing in. He says that although the area attracts negative press, he believes the stocks are starting to outperform and points to the recent healthy performance of the index.

He has also increased his fund's exposure towards financials with less risky balance sheets and a lack of exposure to structured products, and highlights the US Bank Corporation and Capital One as stocks to watch.

Moreover, he says investment banks such as Merrill Lynch and Lehman Brothers, may be 'the next place to move'.

However, Miller is also predicting further consolidation within the financial system and says we could see potential changes to capital requirements within investment banks. He says that we may well see companies like Merrill Lynch and Lehman Brothers partnering with other banks, like HSBC and Wachovia, before the next credit cycle is over.

He says the current system is suffering from over capacity and as a result of this, he predicts the incentive structure of investment and commercial banks are likely to see changes.

Again, if you read the snippet above, I don't need to say much than this: remember dot.com / telcom 2000-2003?
Finally today, an update to this article Automobile wreckage. It isn't just Ford and GM It's not just housing that's getting downright ugly. Stories of people living in cars may be rather optimistic. Here are some figures that should make talk of recovery sound somewhat early, all figures year on year:

GM, SUV and truck sales down 22%, car sales down 14%
Ford, SUV and truck sales down 16%, car sales down 10%

Toyota SUV and truck sales down 14%, car sales down 7%

Honda SUV and truck sales down 12%, car sales up 3%

Nissan SUV and truck sales down 20%, car sales up 10%

“I'd like to be able to tell you that the worst is behind us, but I really can't give you that assurance,” Jim Farley, Ford sales and marketing.

“There's no question that the industry and the economy is in a weakened state,” Mike DiGiovanni, GM.

Share prices rose for Auto shares by between 1-3% on the day the figures were released. Maybe people just drive to Damascus these days.

Market Snippets

Mr Bernanke told Congress that he saw tighter credit for small businesses, lower grade corporations and commercial real estate. He said the US economy could improve in H2 and that housing is the problem. He also mentioned that the Federal Reserve was aware of UBS problems for some time and had worked with the Swiss authorities. The Federal Reserve lending facility (PDCF) made available to primary dealers should prevent more problems.

CHARLOTTE, N.C. (AP) – Wachovia is considering ending their infamous Pick-A-Payment mortgage loans in 17 California counties that have been hit hard by falling home prices and rising foreclosures. The loans offer customers four different payment options each month. Critics say the loans can cause borrowers' balances to increase and carry higher rates. If the loans are discontinued, it would appear to be the first pullback for the nation's fourth-largest bank since Wachovia Corp. acquired that type of loan product when it purchased California-based mortgage specialist Golden West Financial Corp. in 2006.

Commentary by Mick Phoenix

on behalf of An occasional letter from The Collection Agency

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it. The views in the article are for informational purpose only.