“The world's favorite season is the spring. All things seem possible in May,” said Edwin Way Teal. And so it seemed during the past week as we witnessed a further improvement in investor sentiment and risk appetite, supported by the viewpoint that the worst of the credit crisis might be behind us.

The last week was characterized by investors increasingly taking the view that the worst of the credit crisis was over. They seemed to be shrugging off further substantiation of the dreadful state of the US housing situation, as they digested the latest round of quarterly earnings reports.

It’s Earnings, Stupid! Or so it seemed during the past week as the stock market took its cue from a host of better-than-feared earnings reports, propelling the S&P 500 Index 4.3% higher – a bigger gain than for the entire 2007. And what a swift turnaround it was after the market got “GE’d” and was in sackcloth and ashes by the close of the previous week!

A sense of relative calm descended upon financial markets over the past week. Although fears about the outlook for the US economy persisted, a perception crept into markets that much of the bad news related to the credit crisis was now out in the open, with the result that the equity bulls had reason to feel rather pleased with their performance by the close of the week.

“This is one ‘mother’ of a market,” 83-year old market veteran Richard Russell aptly described what market participants were again faced with during the past week. Sentiment was fragile as the outlook was still dominated by the familiar cast of deteriorating economic data, housing woes and concerns about the financial sector.

Phew – what a tumultuous week! Once again, the fall-out of the subprime mess had a lot to do with it. For some variety, however, it was not only financials that were in the limelight, but also commodities that corrected sharply.

Credit and liquidity issues ravaged the financial markets during the past week and resulted in plenty of white knuckles and shaky knees, climaxing on a particularly sour note on Friday with the Bear Stearns bailout.

Donald Coxe, Global Portfolio Strategist of BMO Financial Group, is one of a select group of analysts that have been remarkably right on the “big picture” investment outlook for many years. His recommended investment strategy therefore makes for appropriate reading, especially also in the light of the difficult juncture in financial markets.

The first week of March started off with a deepening credit crisis that appears to have pushed the US economy into recession. Richard Russell, 83-year old author of the Dow Theory Letters, remarked: “The end of a costly (for most) and difficult week. ... this market has darn near worn me out, and I don't wear out easily.”

With the US dollar falling down a precipice, spare a thought for non-US investors invested in US stocks and bonds. This post highlights some interesting graphs, comparing US dollar and euro returns.

Warren Buffett’s 31st annual Chairman’s Letter to Berkshire Hathaway shareholders, released over the weekend, is one of those must-read reports that every serious investor should spend a few minutes perusing. It is essentially Buffett’s annual review of the various Berkshire Hathaway operations, but it also contains a treasure trove of wit and wisdom from the Oracle of Omaha.

The European Central Bank chief voices concern about the dollar after it hit record lows versus the euro today

A laundry list of ominous economic reports, continuing worries about the credit insurers, more news of mortgage-related write-downs and talk of hedge funds facing margin calls served up the perfect storm of investor anxiety last week.

The euro extended its rally against the dollar Thursday to another record high after poor jobs data and a repeat performance by Federal Reserve Chairman Ben Bernanke on Capitol Hill.

Copper finally breaking out of this 2 year consolidation range that I noted in my last post. Today copper finally broke through that $3.75-$3.80 top it’s been hitting and tapping $3.86 as I write. Folks are saying the commodities run, thus copper included I presume, is a bet on the dollar falling further on the next Fed rate cut.