They ain't givin' much in here, it's become pretty tight, and this thing is so massaged by the hot money it has become absurd.
Perhaps Alan Abelson in Barron's has it right, to wit>
Merrill Lynch's David Rosenberg has an interesting take on the action in equities in one of his typically worthwhile recent commentaries. What we're witnessing in the stock market, David observes, is the exact mirror image of late 2002 and early 2003. "Back then, the equity market just kept on slip-siding away even as the economic data was turning up." Eventually, he relates, "the market followed the economy...and we embarked on a four-year cyclical bull run."
Today, things have been turned topsy-turvy. Just as back in the winter of 2002 and the spring of 2003, when investors seemed oblivious to such enticing bullish signs as a less-than-2% federal-funds rate and the nascent recovery in the economy, so David suggests, they seem oblivious now to any number of significant negatives as they bid equities up to new highs, among them downgraded growth prospects, a newly subdued consumer, the remorseless weakness in housing and higher oil prices.
"Technicals, sentiment, M&A and liquidity (margin debt up 32% over a year ago) can take you only so far," he warns. "As we saw four-five years ago in reverse, the economic backdrop very often wins out in the end." We take exception only to the "very often," a phrase we'd change to "inevitably." |
