If we can forecast what type of recession we are in for, we can start to work out what will happen to equities, commodities & currencies –and ultimately when to jump into the market. Let’s look at the facts. The FTSE 100 has risen 30% from the highs seen three weeks ago. Oil has risen from a low of $35 to a high last week of $61. The £ has strengthened 9% since January (as an average across a range of currencies) and has significantly strengthened against the $. April retail sales in the UK rose by 0.9% - 0.4% higher than expectations. So, given this, can we argue the world is leaving recession territory? Well, OECD figures show that combined imports of the G7 fell by 32.6% between July 2008, and February 2009. Unemployment figures in both the US and UK continues to rise. The world’s largest banks have shrunk their balance sheets by $3.6trln and the IMF (which, historically, tends to the conservative side) predict a further $4.1trn write down by the time the crisis ends. Two US economists, Reinhart and Rogoff, have studied all systemic banking crises since the Second World War. Based on their observations they predict that the best case scenario for the banking crisis is a write down of $15trln, and a worst case of $33trln. In short, if you believe Reinhart and Rogoff, the equities market is substantially overbought and the oil glut currently stored in ships off the coasts of Amsterdam, Nigeria and Texas are likely to remain that way for some time. Any benighted idea that we are through the worst of the recession may be like the Captain of the Titanic shouting “Nothing to worry about, it’s only an iceberg!”