Enjoy the bear market rally while it lasts

A wave of optimism has propelled markets off their mid-March lows. But the confidence seems misplaced as credit continues to tighten, and company earnings look set to disappoint.

A wave of optimism has propelled markets off their mid-March lows. American stocks are up by around 8% since then, as financial stocks have surged by 20%; the FTSE has made similar gains and has hit a five-week high.

Meanwhile, some calm has returned to the credit markets, with the cost of insuring highgrade corporate debt falling back rapidly in Europe and America.

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