Things are looking up! Not only were markets perkier last week, but I now have my copies of the Barclays Capital equity/gilt study and the Fortune 500 list of America's biggest companies.
Lists like the Fortune 500 and studies such as Barclays are valuable when it comes to looking at what is happening in markets and putting it into an historical context and it becomes clear, too, that statistical information is more subjective than you might expect.
Take the Fortune 500 list. It ranks firms according to value of sales. This is a reasonable measure and one which has been used in the past to make comparisons between companies and countries. If a company's sales are equated to a country's GDP, then the US's biggest corporation, Walmart, would probably be just outside the top 20 wealthiest nations in the world.
You could argue that ranking by market capitalisation would be more appropriate, in which case, General Electric, the fifth-biggest company by sales, would be number one. Walmart is fifth in terms of market capitalisation. But taking profitability as the key criteria, the leader is Exxon Mobil while the world's biggest bank, Citigroup, has most in assets. Both feature high in all the other lists. Is any measure better than the others? It is hard to say but it is fun to read the lists.
The better stockmarket feel was surprising, given the economic data emerging. Oil shows no sign of coming back in price at present. With petrol at the pumps at its highest ever in the US, the drag effect of a higher oil price on economic activity should not be dismissed lightly. But it is in the confidence numbers that the most worrying message emerged. The National Association of Purchasing Management in Chicago reported a much bigger drop during March than had been expected. The index is still in positive territory but it appears the growth in manufacturing activity is slowing. Indeed, the competitive advantage that Asian manufacturers hold continues to drive business their way – something apparent by the declining presence of manufacturers in the Fortune lists.
But both the US and European markets developed a more comfortable feel. Perhaps it was just the images of the Madrid terrorist atrocities fading from people's minds. It will be interesting to see if this can continue into the new tax year.
The period to the end of March in this country is distorted by external factors. March 31 is the second most popular date on which companies close their books for their financial year. For UK private investors there has been the opportunity to do some capital gains tax juggling as the year draws to a close. For the previous three years, profits were hard to come by. 2003/04 has been altogether a more rewarding period. Once the tax planning season is out of the way, though, investors will have to return to fundamentals to judge how best to invest. We need a number of things to go right for markets to make much progress. This spring could well turn out to be a time for consolidation. Let us hope nothing occurs to disrupt the better feel that has developed.