''THE LUNATICS HAVE TAKEN OVER THE ASYLUM'' - The Dow Jones passed another milestone last night as it went beyond the 15,000 mark. Stock markets everywhere are hitting record highs and even European markets are back at pre-crisis levels. Germany's DAX index closed at a record high yesterday.

Paul Sommerville, of Sommerville Advisory Markets, says it is truly extraordinary that these gains are happening given the state of the so called ''real economy''. "Traders are euphoric because of central bank actions. They are pumping large sums into financial markets. They are hoping to push up equity prices so everyone feels a little richer and will go out and spend a little more. It's a theory you read in economic books, but I don't believe its going to work," he states.

Mr Sommerville believes the central banks are addicted to the stimulus programmes and cannot pull away from them now. "Any time there's talk of ending the programmes, the rally ends abruptly and traders start selling off. The way US Federal Reserve Chairman Ben Bernanke is talking, I don't believe they'll be able to leave them at all."

Germany's strong stock market performance in recent days is as a direct result of the ECB cutting interest rates to a record low in recent days, Paul Sommerville says, but they are expecting follow-up action. "The real economy figures in Europe are really disappointing. The stock markets are telling the ECB that it has to act even more than what it has. Equity markets are pricing in higher values as a result," he explains. "When you see central bankers judging the success of their policies by the way stock markets are performing, the lunatics have really taken over the asylum," he concludes.


MORNING BRIEFS - Building materials group CRH is predicting earnings growth in the second half of the year as its US operations offset a weaker Europe. In an interim management statement, the company said that its European like for like sales so far this year are down by 12% due to the weak economic backdrop and prolonged winter conditions.

*** Tullow Oil has an interim management statement out this morning in which it reiterates its production guidance for 2013. Its Jubilee project is performing in-line with expectations while in Uganda the field partners and the government have moved closer to agreeing an upstream development plan.

*** London and Dublin listed exploration company Providence has reported an operating loss for the year of just over €5.4m, up from the just over €4m reported last year. The loss is a result of higher administration expenses related to its drilling operations, including the Barryroe field off the Cork coast which has significant oil and gas potential. The company also paid down all its debt from the proceeds of the sale of its UK onshore assets.

*** China's trade deficit improved markedly in April which may help to ease concerns over the health of the world's second biggest economy. Exports and imports grew more than expected in the month according to data from the Customs Administration, which comes with something of a health warning. China's exports rose 14.7% in April, while imports grew 16.8%, leaving a trade surplus of $18.16 billion for the month. That reverses a trade deficit of just under $1 billion last month.

*** The Financial times is reporting that Qatar has approached International Airlines Group, the owner of British Airways and Iberia, with an informal offer to become the company's largest shareholder. It has reportedly offered to buy the 12% stake held by nationalised Spanish lender, Bankia.

*** Disney reported first quarter results overnight - the results showed that revenue rose by 10%, while net income was up a third on last year to $1.5 billion. That was largely down to higher revenues at its sports network ESPN and the takings from the box office hit, Oz the Great and Powerful. Its theme parks also performed very strongly despite the company slashing investment there. By doing that it hopes to have more cash to return to investors by means of share buy backs.