On the good news side, Leading indicator increased 0.1% to 102, the first back to back gain in about 6 months. I’m calling a dead cat bounce.

One of the reasons is because of good news like, southern California house sales “surging” 22% from March to April, where the reporter ignores the fact that while this is a month-to-month gain, year over year, it’s still a 19% drop, and one of the weakest Aprils on record.

So Cal has a Mediterranean climate, which means that March is wet. People don’t house sit when it’s wet.

It also ignores the small fact that 34% of those sales were REOs, real-estate owned properties. So these were basically foreclosed properties.

It’s why California Luxury home prices fell for the 2nd straight quarter.

Not only are real estate prices still falling, but Commercial property prices are falling, the most since 2000. (A critique of the financial press on this in a later post)

In contrast to Bernanke and Paulson, Jean-Claude Trichet, head of the European Central Bank is saying that the credit crunch is ongoing. I think that this is true, and portends a major shift in the financial markets. (Again, I’ll go into more detail in a later post)

As to why, perhaps the fact that banks are doing accounting backflips to keep $35 billion in losses off of their balance sheets justifies a lack of faith in the financial markets and financial industry.

Of course, boneheaded moves like UBS blowing $24 billion by deciding to expand into asset based securities further erodes people’s confidence in financial “professionals”.

My cats could do better on the cat-turd futures market than these guys.

As a result, we are seeing another big LBO foundering, this time the the $51.8 billion Bell Canada takeover, what is (was?) to be the largest LBO ever.