Based on the Challenger Job Cuts Report, announced layoffs posted their second monthly decline, falling 19.3 percent in March. The worst of the planned job cuts were in the government and non-profit sectors. The former trimming payrolls in response to declining tax revenues and shrinking budgets, and the latter due to falling donations.

There’s not much that can be done about government cutbacks until real estate prices stabilize but non-profits may have gotten a glimmer of hope this week. The US Senate unanimously approved an amendment to the pending budget plan that rejected President Obama’s proposal to cap the size of itemized deductions taken by those who earn more than $250,000 a year. Obama’s plan applied the extra $318 billion the plan would have created to help fund an overhaul of the health care system but the Senate nixed it because of the feared the effects on charitable giving.

Initial jobless claims continued their upward march, rising to 669,000 last week from a revised 657,000 in the prior period. The rate of increase appears to be slowing, suggesting that the employment situation may be reaching a state of equilibrium.

However, continuing claims rose sharply by 161,000 workers, with 5.728 million workers continuing to draw on unemployment benefits. That’s the highest level since tracking began in 1967.

Today’s jobs report showed that in March the US shed 663,000 jobs, slightly more than the 660,000 increase economists had anticipated. Some of the worst losses were in temporary help services and the retail industry.

The official US unemployment rate has now reached 8.5 percent, a 25-year high.

Based on reports from the Institute of Supply Management, it doesn’t seem likely that we’ll see much improvement on the employment front soon. The ISM’s manufacturing report remained relatively flat in March at 36.3 versus 35.8 in the prior month. Non-manufacturing also remained relatively flat, falling to 40.8 from 41.6. Overall, customer inventories remain too high and new orders are falling short but factory orders rose a modest 1.8 percent in February.

Real estate data remained weak with construction spending continuing its decline in February, falling 0.9 percent. The decline could have been worse were it not for a 0.8 percent increase in public construction spending.

The Case-Shiller Index showed home prices fell another 18.9 percent in January in twenty major metropolitan areas, which likely helped to spur the 2.1 percent increase in pending home sales in March. Pending sales were off from the same time last year by a little more than one percent. Mortgage applications also rose by three percent last week.

Finally, consumer confidence posted a very modest increase in March, rising to 26 from 25.3.

Overall, the data wasn’t too cheery this week but the picture seems to be improving enough that investors seem to be experiencing a rejuvenation of hope. I would play the markets rather conservatively by establishing key positions and keeping an eye toward stocks with defensive qualities. In other words, playing the market with stocks that with easily identifiable, sustainable revenue streams that are suited to handle this type of market.

One thing that I found interesting this week was the nice rally in financials. Though, I fear it has more to do with the fact that the Financial Accounting Standards Board institutionalized a bit of fiction: FASB voted to loosen the mark to market accounting standard, allowing banks to avoid having to mark down securities they plan to hold onto. Under the revised rule, if the bank asserts that they intend to hold on to an asset for the long term, they can’t avoid the mark down.

In the short term, it could likely lead to an improvement of bank balance sheets in the second quarter because they’ll be better able to minimize profit write downs. It will also likely serve to reduce the amount of regulatory capital banks will have to maintain.

In a way, the move makes sense. Particularly many of the so-called “toxic assets” that have seen market prices plunge are continuing to generate substantial cash flows that aren’t always properly accounted for in prices. In many cases, the assets are being priced on fear as to anything else.

I’m of the opinion that a bank really isn’t really worth more than its assets at any given point and if it’s my money, I want to know what their cash cushion is. In that respect, an asset isn’t worth any more than what a bank can sell it for at any given point.

That leaves me worried that financials have rallied on the assumption that this accounting change makes the problems go away, which isn’t the case by any stretch of the imagination.

Speaking Engagements

Make plans to join Roger, Elliott, Gregg Early and I at the 18th Atlanta Investment Conference. Sponsored by Friends for Autism, the conference is held in a mountain setting north of Atlanta from Thursday, April 23, to Saturday, April 25.

Roger, a steady hand through many market events such as the one we’re dealing with now, will talk about Canadian income and royalty trusts as well as his new service focused on exploiting the greatest spending boom in history, New World 3.0.

Elliott will detail the new direction for Personal Finance and provide insight into his approach to stock selection and portfolio management. What’s required now amid these difficult times are clarity and focus, qualities Elliott has demonstrated in these pages and through The Energy Strategist for years.

Gregg, a constant at PF for nearly two decades, will be there to address recent developments with the publication. He’ll also discuss the Smart Grid, an endeavor he’s exploring as part of his role with New World 3.0.

As editor of Louis Rukeyser’s Mutual Funds and Louis Rukeyser’s Wall Street, I will be discussing efficient, cost-effective ways to simplify the investing process.

Be sure to bring your questions. These guys love to talk markets and everything that impacts them.

Attendance is limited to 175 of the most enlightened, savvy individual investors. Go to http://www.aicatchota.com/?kloc=NONE for more information. Meals are included for the Maple Leaf Memo discounted price of $459 for a single and $599 for couples. Call 770-952-7861 or e-mail altinvestconf@mindspring.com to register.