Posted on 07/31/2009 5:46:08 PM PDT by Kaslin
Let's call this what it is: A new bull market in stocks has emerged from the ashes of the financial meltdown and the deep recession that followed.
And it's signaling the onset of economic recovery. Free-market capitalism is more durable, resilient and self-correcting than its detractors would have us believe.
This is not just a summer rally — although a 12% market rise since July 10 is absolutely splendid. There's a lot more going on here.
Over the last five months, since March 9, the broad-based S&P 500 is up 46%. If I'm not mistaken, a 20% rally that is not quickly reversed constitutes a bull market. We are more than double that, and there will be no total reversal.
Consequently, I want to change the agenda. This is much grander than what most commentators are describing. This is a new bull.
With positive, beat-the-street earnings coming from all corners of the economy, the current rally is based on solid fundamentals.
Two-thirds of S&P firms have reported, and 75% have beaten profit expectations by 10% on average.
Just look at the recent results posted by companies as diverse as Dow Chemical, MasterCard, Visa, Tyco, Colgate-Palmolive, Kellogg's, Cummins and International Paper, all of which followed better-than-expected announcements from Caterpillar, IBM and Intel a few weeks ago.
(Excerpt) Read more at ibdeditorials.com ...
Communism sucks! Capitalism rules! The people now living in this country and yearning for Socialism and Communism better figure out what we Americans already know. The parasites of Socialism and Communism cannot survive without capitalism around to feed them. Socialism and Communism fails every time it’s tried.
mark
Larry, why do you spread such bull$hit? Pumping the market like you and your CNBC ilk will do nothing but hurt investors. Damn GE media crappola.
Look where the profit is coming from...cutting labor costs (layoffs), inventory depletion, no capital spending. Revenues are way down, as are YTD sales (and 2008 was already a crappy year).
Financials led the way on this rally, and we know why they are making money...on our dime! Anytime you can borrow money at nearly nothing your balance sheet is going to look good.
The real economy is still in very dire straits, regardless of what the market might do. This bull market could very well run for another couple of months, the same thing it did in 1930.
Hun, agree 110%
Kudlow has just gone batty! He’s joining the lying happy talk shills at that joke financial network. I can’t stand watching them more.
Maybe a poor analogy, but I see this as kind of like a person who suffers a serious disease, but with treatment manages to resume something of a normal life. He’s still sick, never will be as good as before, but at least not dead yet.
The trends Kudlow cites are testament to the markets tendency to “want to grow”. They’re like the person feeling good about going out and walking around the block when he used to run marathons before. The constraints on true economic growth are the disastrous policies that Congress and the Obama adminstration have imposed that sap the strength and resources needed for a full-blown recovery.
Exactly right !
Good explanation. Many of these companies are turning a profit only because they have downsized and laid off many of their employees and cut the hours of others-something that can only go on for so long. They're just marking time while, as you point out, spending next to nothing to expand. Their profits are built on a house of cards with the expectation that the economy will get better in the next few months-if it doesn't,............then what?
Between now and 2011.....
USA inflation will increase.
USA interest rates will increase.
USA Dollar value will decrease.
USA taxes on America's most productive workers will increase.
USA government debt will exceed the USA Gross Domestic Product.
Between now and 2030.....
USA government debt will reach at least THREE times the USA Gross Domestic Product, because of Baby Boomer demands on Social Security and Medicare.
There was a distinct change in CNBC's coverage after Immelt had his little chat with them.
With the commercial real estate bust beginning, the prime loan market now in trouble, rising unemployment even at the best time of year, and credit still not available, I can't see any reason for his optimism other than politics.
Companies becoming more efficient is not a bad thing. There was tons of excess and inefficiencies in the bubble economy of the last 5 years.
Short-term pain for long-term gain...
Kudlow is correct that there is still tons of money on the sidelines. Deposits at healthy banks are skyrocketing. This means there is a lot of undeployed capital out there waiting to jump back in.
I’m not fully on board that we are in a new bull market. Those who seem to revel in a coming depression, though, may find themselves disappointed. Even Obama can’t kill America’s capitalist tendencies.
Did someone put something on your Corn Flakes this morning?
I'm no prognosticator, but I do know a “sucker rally” when I see one.
Um, we aren’t a capitalist country.
Until enough debt is shed by the US consumer, there is little market for goods. Until demand increases, our economy will continue to decline and demand can’t increase in this climate.
The money will continue to sit on the sidelines, held in reserve for coming failures. That’s exactly what the banks are doing with a huge portion of their cash assets.
The years between 2000 and 2004 leaned companies out..many survived on lower margins than they traditionally had. These current profits aren’t due to productivity gains, they are due to cuts in operating expenses and inventory.
This is a false market, great for traders, but not good for much else IMHO....
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