Well, let’s lead with a rather unique bit of news, the volume of the derivatives market fell for the first time ever in the last 6 months of 2008.

The outstanding contracts fell by 15% to $592 trillion dollars (!!), or about forty times the GDP of the United States, and 110% of the entire planet.

My guess is that people suddenly realized that they had absolutely no idea at all what the hell they were holding, and started to unwind, because they did not know who they could trust.

It’s the sort of story I like, so I put it first even though by all rights the fact that Japan’s GDP fell at a 15.2% annualized rate in the first quarter of this year.

That’s Eastern Europe imploding numbers.

Export driven economies like Japan’s are going to take a hit, which is why
Moody’s is warning on possible downgrades of Asian banks, specifically those in Korea, Malaysia, the Philippines, and Indonesia.

Still we have a couple of glimmers on real estate, with the Architecture Billings Index holding steady in April, indicating that there future building is at least taking a pause downward, and mortgage applications rose in response to low interest rates, though much of that is refi activity.

Of course, the commercial real estate market market is still heading down sharply, which is why the Federal Reserve has expanded the TALF to include commercial mortgage backed securities.

Ending with oil and the US dollar, oil finished above $60 for the first time since November, $62.04/bbl, and the dollar hit a 5-month low on more optimism about the world economy.

I don’t get that last bit. All I see is a dead cat bounce.