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Trillions of taxpayer dollars spent and in return promises, hopes and more have filled the airwaves from presidential speeches, preliminary questionable economic data and a media that has called the official bottom to the stock market. The markets now sits up 25-30% in the last 6 weeks. All seems to be returning to normal or at least that is what those in the upper levels of government hope you think. The wool can only be pulled over the markets eyes for so long. Changing accounting rules to hide losses, pumping trillions of dollars into banks and financial institutions to re-inflate the credit bubble has a small chance if any at succeeding.


Let's take a look at some of the recent data that has been swept under the rug while bank profits took the forefront. After an impressive drop in foreclosures in January, the February foreclosure rate jumped 6%. In addition, foreclosure jumped even more in March, up 17% from February. Note that while the market has continued to rise with speculation that the bottom is already in, quietly foreclosures over the last two months have jumped dramatically.


Retail sales reported last week were also troubling. After two months of slightly better than expected numbers, March retail sales fell a surprising 1.1% excluding autos. The previous two months had shown two straight increases in retail sales. Again, quietly these numbers left the markets unaffected as the light volume kept the markets afloat.


Last week saw another publicly traded company with some very scary news. Capital One Financial (symbol: COF) reported U.S credit card charge-offs of 526.5 million with 3.4 billion of credit card debt from cardholders being at least 30 days delinquent. Net charge-offs in March rose to 9.33%. These numbers are alarming as it shows the consumer getting further and further behind in payments. This all happening while credit card companies are jacking up rates for those card holders.


Last but not least, California reported that their unemployment rate jumped to 11.2%. This sits above the national average the government has listed for the public at 8.5%. Many areas in the U.S such as those that were former auto maker hubs have even higher unemployment rates. It is estimated that the real unemployment rate sits somewhere between 10-12% across the United States. As unemployment continues to rise, credit card and loan defaults will continue. Remember, the first debt to be defaulted on is credit card debt. Why? Because it is neither a car which is needed for work nor a home needed for living.


This massive market run up on light volume should be viewed with extreme caution. All the economic and earnings news mentioned above should be a signal that this economy is no where close to being out of the woods. Rising unemployment means continued credit card defaults will continue, retail sales falling and higher foreclosures on the horizon. The government, Federal Reserve and Treasury have done a fantastic job at attempting to restore the bubble once more. Trillions pumped in, bank profits, stimulus money and a stock market that has ripped higher by almost 30%. All of this in an attempt to increase confidence and get the consumer spending again. However, the data speaks for itself and the trillions printed could be creating the most worrisome problem yet down the road, hyperinflation.


By Gareth Soloway,
www.InTheMoneyStocks.com
The Leader In Market Technical Guidance