April 17, 2008 | posted by Michael Baxter in US economy, credit crunch |

Good news came to the surface yesterday.

The good news came from three main areas, and markets in the US soared as a result. 

First there was Big Blue. Good old IBM: first quarter profits were up 26 per cent on this time last year and revenue jumped 11 per cent over the year. IBM’s impressive results were partly down to the falling dollar, with the company saying revenue would have increased by 4 per cent if it wasn’t for the currency fluctuations.

So, you may dismiss much of Big Blue glee by saying, Ah yes, but if the dollar had stayed firm things would have been different. But the falling dollar is the point. If the US is to export its way out of trouble it needs a cheaper currency, and IBM’s results suggest this is working.

Whether the rest of the world can afford a US which exports more and imports less, is another matter, and remains to be seen.

But, yesterday, eBay also revealed something of a humdinger.

Profits shot up to $456 million, compared to $377 million a year ago. It was the second best quarter in the company’s history.

The company enjoys the bulk of its revenue outside of the US, so once again the falling dollar has been important, but not vital.

In times of economic hardship, one would assume demand for online auctioning will increase. Presumably families will search their attic for things they can sell, and others will search the pages of eBay with even more glee, looking for the bargains.

Finally, came JP Morgan. Profits were down at the bank, but the point is, it made a profit. In all, the bank made $2.4bn in its first quarter, that was half the profit seen a year ago, and included another $2.5bn of provisions for future credit losses. In all, total provisions amount to $12.6bn. All in all, though, not a bad set of results from the bank, considering.

And that brings us to today. Merrill Lynch will be announcing its latest results today, and analysts will be waiting with apprehension.

The markets have done pretty well of late, the Dow is now 900 points up on the 2008 low of early March. Ben Bernanke has apparently chartered a fleet of helicopters from which to drop parcels of money on to the grateful banks below, and with the tax credit sure to help lift sales soon, the mood seems decidedly bouyant.

Yet yesterday, JP Morgan’s Chief executive Jamie Dimon said he believed the credit crisis could last for the remainder of this year.

There are also fears that most US citizens will save, rather than spend, much of their tax credit – a natural reaction at a time of worry.

Within the next week or so we will know a good deal more. By then, the rest of the US banks and bellwether companies will have released their latest results.