Green shoots everywhere and the markets charge on, ignoring any number of warning signals about the rapidly rising toll of damage the recession is now doing.
Investors everywhere are pushing shares up for a sixth week, copper prices are rising, as are prices of agricultural commodities such as coffee and while gold is falling, oil is sort of steady around the $US50 a barrel mark and the feeling is one of renewed confidence that the worst of the recession is over.
It could very well be, but that doesn’t mean the recession is over, nor the continuing rise in unemployment.
This continuing feeling of confidence is despite two more US regional banks failing on Friday and being closed and sold off.
They were the 24th and 25th American banks to collapse this year, equal to the number for all of last year.
The continuing instability among regional banks is being ignored by investors focused on the big banks and their current quarterly reports, which while profitable, are not showing solid, recurrent earnings streams yet.
The confidence is still is in focusing on searching for these ‘green shoots’ and rationalising their importance and ignoring some more realistic news.
This is best exemplified by the monthly Fund Manager Survey from Banc of America/Merrill Lynch which revealed "the most optimistic reading on global growth since 2004.
"A net +24% of investors believe the global economy will strengthen over the next 12 months. China remains the principal catalyst but growth optimism has now broadened out to all regions, including previous laggards Europe and Japan. (Source). (See separate story)
"Our risk appetite indicator climbed to a 12-month high. Asset allocators are less pessimistic on equities, sharply cutting their underweight" positions," the firm told clients over the weekend.
US consumers are getting a bit more confidence: the latest confidence survey showed a noticeable improvement.
At the weekend two senior Federal Reserve members, Vice Chairman Donald Kohn and New York Fed chief William Dudley, both pointed to signs that measures taken by the central bank are working to help revive the economy.
And Paul Volcker, a senior economic adviser to the Obama administration and a former Fed chairman himself, said the rate of the economy’s decline is set to slow, but he added that the economy faces a "long slog" towards recovery.
Both Mr Kohn and Mr Dudley made the point that without the Fed slashing rates and pumping trillions of dollars into the financial system and the wide economy, the US would have frozen. Both indicated there was still a long way to go for any recovery.
Two days earlier, in New York, two top Federal Reserve policy-makers — Dennis Lockhart, president of the Atlanta Fed, and Janet Yellen, president of the San Francisco Fed — told the conference in New York that the recovery, if it came, wouldn’t be strong.
But they also diverged on that tepid rebound, with Mr Lockhart seeing a return to growth later this year, while Ms Yellen said there was potential for an even deeper contraction.
Mr Lockhart said he expects the recession to end by mid-year with growth slowly picking up in the following months.
"Today, the economy is still very weak, but there are some encouraging signs that support cautious optimism," he told the conference in New York.
"I do not expect a strong recovery, but I do expect the economic contraction we’re now experiencing to give way to slow and tentative growth as early as the third quarter."
Ms Yellen, however, took a more cautious interpretation of the latest economic data, saying signs of improvement should not be taken to mean the US economy is out of the woods.
"The negative dynamics between the real and financial sides of the economy have created severe downside risks," Yellen said. While Fed credit policies have created "a few welcome signs of stability", financial markets remain highly stressed, making them an impediment to recovery, she warned.
"While we’ve seen some tentative signs of improvement in the economic data very recently, it’s still impossible to know how deep the contraction will ultimately be."
Despite his relatively more optimistic outlook, Lockhart said he remains wary about the impact of weakness in the commercial real estate sector and the harm this could yet do to banks, as well as further nasty shocks from employment and the slide in house prices.
That’s a view he’s expressed a couple of times in other speeches in recent months. It was confirmed by the collapse of General Growth Properties late last week, America’s second biggest shopping centre operator (see below).
And Fed chairman, Ben Bernanke said in a speech at another function that the collapse of US lending will probably cause “long-lasting” damage to home prices, household wealth and borrowers’ credit scores.
“One would be forgiven for concluding that the assumed benefits of financial innovation are not all they were cracked up to be,” the Fed chairman told Fed’s central bank’s community affairs conference in Washington.
“The damage from this turn in the credit cycle — in terms of lost wealth, lost homes, and blemished credit histories — is likely to be long-lasting.”
That’s the best cautionary comment so far from a regulator about why it will be foolish to treat any recovery in the US and global economies as a reversion to the pre-crunch times of mid 2007 and
