The early sprig bloom in the world’s stock exchanges that started toward the beginning of March has brought about discussions on its nature. Most analysts term it as a rally in a bear market, but there are economists who say that this is the beginning of a new long-term upward trend. Incidentally, last week it was the US government’s decision to spend huge amounts of dollars in two directions which gave new momentum to stocks in all and every market. Washington said that it will subsidise the private sector to buy up the toxic assets of banks. The subsidies will take the form of cash and state-guaranteed loans to cover almost the entire value of toxic assets held by banks, in order to be bought by private operators and make the loans markets run again.

The other Washington plan is aimed at the real economy with state-supported action in the real estate market and other sectors. Both actions are estimated to mobilise resources of two trillion dollars. Stock exchanges, however, had started their upward rally before the American government announced its scheme to cover the toxic assets of banks. So it was not the US action which mobilised bourses, but other factors such as the deep dive of values of the past six months and some positive profitability announcements by large market players, such as Citigroup. The question remains what happens to the economy. Stock exchanges can emancipate themselves from the real economy, but not for long. After some time, real economy news about profits, production and consumer demand will again prevail and bring the stock exchanges back and down to the real world. This seems to have already happened.

Towards the end of last week, stocks in the New York exchange turned to the red and both DJINDU and NASDAQ lost a good part off their value. The same trend was noted in Europe, where all the major bourses turned to negative grounds. Coming now to predict the market trends on a longer term, that is until the end of this year, investors should look for the basic macroeconomic statistics as they appear in US and Europe. Actually, Eurostat, the statistical service of the European Union, announced that industrial orders were reduced this February by the astonishing percentage of 34.2 percent, on a year-to-year basis. If this trend continues, then there is not one chance that the European economy will turn to positive grounds before the end of the year.

Along the same line, OECD predicted that the economies of its 30 member states, comprising all the industrialised western countries, will lose 4.2 percent off their Gross Domestic Product this year. It is then absolutely impossible that the western economies will regain their upward momentum within 2009.

If one adds to all that the new upwards trend in the oil market, with the demand for energy dropping, then the prospects for the next months in the real Atlantic economy are not at all rosy. Stock exchanges will sooner or later be obliged to recognise this and come to terms with reality.