Apocalyptic bears take note: current conditions are hardly as hellish as when markets crashed in 2008.

Despite a long secular bear market with a powerful recovery rally for the financial markets, we now look at some contrarian data points which may keep markets from falling in a second leg down.

6) The BP Failure is Not The Credit Crisis Failure

Once sporting a $180 Billion dollar market cap, British Petroleum (NYSE: BP) is now valued under $90 billion just 2 months later. Even if bankruptcy is imminent due to the magnifying environmental catastrophe, BP’s failure is still no comparison to the Credit Crisis Collective of AIG, Ambak, Bear Stearns, Citigroup (NYSE: C), Fannie Mae, Freddie Mac (NYSE: FRE), Lehman Brothers, MBIA Inc (NYSE: MBIA), Merrill Lynch (NYSE: BAC), Wachovia (NYSE: WFC), WaMu (NYSE: JPM). These financial cancers caused well over $1 Trillion in market cap losses.

In the case of BP, there are Dow components and blue-chip companies like Chevron (NYSE: CVX), Exxon Mobil (NYSE: XOM), Shell (NYSE: RDS-A), Proctor & Gamble (NYSE: PG) and Marathon (NYSE: MRO) gaining market share as beneficiaries of the BP Bust.

5) Global Liquidity

The $1 Trillion E.U. Stimulus package delayed by European bickering will likely play out like the famed $787 U.S. stimulus package. In February 2009, the U.S. stimulus bill became law and consequently the markets bottomed a month later. In May, the E.U. initiated the same, yet larger, stimulus-saving injection into the European economy. Once that money hits the system, a similar playbook could take effect.

4) Upcoming Congressional Elections in November

Extension of the first-time home buyer tax credit is a vital necessity to give the housing market sustainable signs of support. The wake up call for politicians was the latest May new homes sales figure dropping 33%. Right now, politicians are seeking out the best policies for re-election, and the tax credit extension for first-time home buyers is a simple vote-grabber for any politician who wants to strengthen chances for victory this Fall. Thus, future housing relief policy announcements should come to the forefront as a price floor to the overall housing markets.

3) CEO Hiring Confidence Reaches 3-year High

This week, the Business Roundtable — a group of CEOs from large U.S. companies — shared their survey showing 39% of CEOs expect to hire new employees in the second half of 2010. In conjunction with positive double digit sales growth from a high number of companies so far this year, private employment numbers could see a significant and surprising rise. Also, 79% of CEOs surveyed said they expect sales to rise in the second half of 2010. If you rewind the picture to the March crash period of 2009, both the sales numbers and sentiment has improved dramatically since then.

2) Technology is Driving Innovation Out of the Recession

Mobile is quickly becoming the future. Sprint (NYSE: S) is feeling the pent up demand for their new Evo 4G mobile phone. I was recently at a retail Sprint store location in Chicago and asked a sales rep if any Evo 4G mobile phones were available. She said they were sold out and on back order. This is a great sign. Moreover, Microsoft’s (Nasdaq: MSFT) breakthrough joystick-free 3-D Gaming Technology is slated to be a December holiday hit. Intel (Nasdaq: INTC) is entering into the world of Google TV. Google (Nasdaq: GOOG) has positioned itself as the small business savior success story in the Great Recession. There are now over 234 million living websites on the internet while online ad spending increases and entrepreneurs utilize Google’s more efficiently expanding toolkit for making money.

1) The Consumer is Not Dead

Retail is showing signs of life. Adobe (Nasdaq: ADBE) reported strong revenue growth of 34% year-over-year. Additionally, Oracle (Nasdaq: ORCL) delivered a 39% rise in revenues from $6.86 Billion to $9.51 Billion. Apple (Nasdaq: AAPL) has sold over 3 million iPads in less than 3 months, with swarms of demanding consumers lined up for the iPhone 4 release. Amazon (Nasdaq: AMZN) is still glowing from their expanding online shopping dominance, 46% worldwide revenue growth in their Q1 2010 report. Even though private employment numbers were weak, strong government hiring is still putting money in people’s pockets. Consequently, consumers remain in line for breakthrough gadgets like the iPhone 4.

Conclusion: Japan’s Lost Decade Was Not a Crash

I expect choppy waters as we undergo a turbulent period of uncertainty and volatile swing action. Even with a hurting housing market, a failing BP catastrophe, and the EU sovereign debt crisis, the U.S. economy in June 2010 is beyond the lows of March 2010. U.S. companies were the first to implement cost-cuts and ultimately they will be the first to lead the future hiring rebound.

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Can we avoid black swans? Ken Posner — veteran Morgan Stanley (NYSE: MS) securities analyst and author of the book Stalking the Black Swan: Research and Decision-Making in a World of Extreme Volatility– says, “Yes.”

Posner states, “Volatility results from market economies, global capital flows, and information technologies and is necessary for innovation and progress. Rather than wishing volatility away, we need to design a financial system that is more robust in the face of extreme volatility, and refine decision-making techniques to account for the risk of Black Swan events.”

Here are 6 ways Posner asserts we can avoid black swans:

1. Cut government debt, a potential cause of extreme outcomes. Politicians should focus on this rather than blaming markets, which reflect volatility but do not cause it.

2. Place Fannie Mae, Freddie Mac (NYSE: FRE), and the Federal Home Loan Banks into run-off and reduce US government liabilities by some $7 trillion.

3. Build “shock absorbers” into the system like mandatory “contingent capital” for systemically important financial firms, rather than proscribing activities for banks and hedge funds.

4. Impose shorter term limits on the Federal Reserve Chairman’s service because too much trust in the persona can contribute to excessive volatility (the “Greenspan put”).

5. Improve corporate governance to mitigate the problem of ”cognitive dissonance,” when successful executives dismiss new data that contradicts deeply held-beliefs, evidenced by Goldman Sachs’ (NYSE: GS) missteps in reacting to the SEC lawsuit and managing the firm’s political vulnerability.

6. Return to fundamental research, a practice that executives, risk managers, and individual investors should follow to better understand the macro and micro causative factors likely to affect a company’s performance.

Do you have more ideas for how we can avoid black swans? Let us know in the comments below …

If you are interested in successful investing and trading ideas in the current volatile markets, click here for a free trial to our acclaimed Wall St. Cheat Sheet Premium products.

Like the health care law, financial regulation is a big fat sausage factory. If you are simply looking for the key takeaways of the moment, we’ve compiled a cheat sheet for you:

1. The next step is to reconcile yesterday’s Senate bill with the House bill from December.
2. The bill creates a process for liquidating financial institutions which become too big to fail.
3. The bill creates a council to monitor threats to the economy (a job currently delegated to the Federal Reserve but clearly not done properly).
4. The bill adds restrictions to derivative and prop trading inside US banks.
5. The bill creates a Consumer Financial Protection Agency which has the power to ban lending which the Federal Reserve considers abusive.
6. The bill requires borrowers to show proof they can pay mortgage loans.

The bill does not address key issues such as:

1. Setting risk limits on financial institutions that have become too big to fail.
2. Addressing key problems with GSEs Freddie Mac (NYSE: FRE) and Fannie Mae (FNM).
3. Better separating Main Street banks from Wall Street banks.

The bill is expected to reconcile and become law around the 4th of July.

If you are interested in reading the entire bill, click here to visit Open Congress.

On April 30, the Home Buyer Tax Credit expires. If you’re a buyer, you shouldn’t care because when the credit disappears house prices will drop the same amount. If you’re a seller or real estate agent, you should be scared shitless because you’ll need to drop your price the same amount to keep people interested.

On a scarier note, during a recent Charlie Rose interview with housing expert Robert Shiller, Shiller offered some mind-numbing insights into Uncle Sam’s position in the US housing market:

Charlie Rose: You’ve said that 90% of the housing market is supported by the government.
Robert Shiller: Well, it’s 80% or 90%. Really almost the whole market now is government. And we know this can’t last.

Rose: And that means prices are being artificially inflated?
Shiller: It seems to. Government support is especially prominent in sales of existing homes, which shot up to over 6 million on an annual rate in November 2009, the month that the home buyer tax credit initially was supposed to expire.

On the unsupported side of the housing market, Fannie Mae reported the rate of serious delinquencies (90 Days overdue) for conventional loans in its single-family guarantee business jolted to to 5.52% in January from 5.38% in December. This is a 100% increase since January 2009.

The next eight weeks in the housing market should be very interesting. If you’re looking for excellent research to keep you ahead of the curve, consider a free trial to our new Real Estate Cheat Sheet Premium. Our first 20-page report is fresh off the press, so click here now to get your free copy.

This is a guest post by The Golden Truth.

“U.S. Treasury Secretary Timothy Geithner said the government’s borrowing needs would be substantially less than expected”

If he made that statement in front of an audience of Chinese university students, he would have been laughed out of the auditorium.  I’m thinking he forgot to take the speech that Robert Rubin had prepared for him and he was ad-libbing.  Clearly, his tax-dodging was a result of a complete lack of math skills.  The arithmetic is pretty simple:  when the Government increases its spending at an increasing rate, and at the same time revenues fall off even more quickly (I guess that’s really simple calculus – sorry Tim), you have a situation which requires the Government to borrow at an increasing rate to make up for the gap between spending and revenues.

I guess if the Government were to pull out of Afghanistan, rescind the unemployment insurance extension, fire most of Obama’s useless Czars plus staff, cut off FNM, FRE, GM, C, AIG and its other corporate welfare projects, shelve Obama’s Stimulus 2…the list really goes on and on and on and on….I guess Tiny-Brain Tim could make a case that the U.S. might actually slow down its appetite for more Treasury debt and not look like a retard.

Until then Tim, stick with the speech your masters prepare for you.  Both you and your boss are terrible at speaking off-teleprompter.

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