Waiting For Chrysler

As we sit around and wait for the "imminent" Chrysler announcement, I take a moment to ponder the market's recent rally. If there’s anything that spells “rip-snorting equity market rally,” it’s a negative 6.1% contraction in GDP. Or perhaps it’s a Fed announcement that says things are really bad, but maybe only getting worse at a slightly lower pace. Or is the bullish nes the fact that the yield on treasuries has crept higher than where it was when the Fed announced its quantitative easing program? In any event the market is in the mood to filter through any bad news to find the “green shoots.” An announcement such as the imminent bankruptcy of one of our big three automakers becomes “thank goodness we’re finally putting it out of its misery.” Or the fact that continuing unemployment claims hit yet another record at 6.3 million becomes rabidly bullish because the pace of increases appears to be slowing. While I certainly believe that a decrease in the pace that the economy is falling off a cliff is positive, it seems entirely too soon to claim that we’re headed for a quick rebound in the second half and that the consumer is going to save us yet again because we had one month’s worth of happy consumer confidence numbers. It certainly can’t be the case if unemployment is headed for 10%, housing price declines fail to stabilize and commercial property defaults surge.