Don’t buy into this sucker’s rally

Is the worst of the credit crisis over? Equity markets think so. But the credit crunch is only just beginning to affect economies, and more trouble ahead means this looks like a classic 'sucker's rally'.

Is the worst of the credit crisis over? Equity markets think so. American and British stocks have hit four-month highs, with the latter up by 14% from the March low; European stocks have gained about 14% since then.

Since the rescue of Bear Stearns, investors have assumed that financial meltdown has been avoided. Some credit markets have shown signs of life and there are growing hopes that the US economy can revive later this year. But as David Roche says in The Wall Street Journal, this looks like a classic "sucker's rally".

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