KPIG Radio / The Profit Motive May 12

Stocks climbed further as fears over the European Debt crisis subside. That said credit spreads continue to widen suggesting that the bond markets remain unconvinced that it is indeed over. Sharply wider credit spreads were a hallmark of the 2008 financial panic and it could well be that the Greek crisis turns out to be the canary in the coal mine.

The March trade deficit increased 40.4 billion as imports increased faster than exports, petroleum accounted for 24.8 billion or more than half of the trade deficit, a deficit that has grown steadily since early last year.

It seems that purchase activity is beginning to slip with the end of the Federal Tax credit. As the latest MBA report increased to 578.1 on a 14.8% increase in refi activity, purchases fell 9.5% while the 30-year contract rate remained unchanged at 5%.

The Treasury Unified Budget Deficit for April was 83 billion nearly 3 times expectations. Through the first 7-months of the fiscal year the deficit is slightly lower than last year and projections indicate that this years deficit will come in below last years record of 1.4 Trillion.

It seems Goldman Sachs wasn’t the only big investment bank to make money trading every single day during the first quarter as JP Morgan, B of A and Citigroup also succeeded in turning in perfect 1st quarter trading records as well. A person can look at this and think gee they must be super smart, savvy traders to turn in a performance like that. Those of a more cynical bent, myself included, are inclined to believe that they have advantages that are unavailable to the average investor. Casting doubt on both the efficiency and transparency of the markets, something that will merely add to the suspicion and mistrust already held by the general public.