So what exactly is going on? Despite preposterous headlines such as "Strong Fourth Quarter Growth May Give Reason to Bid Up Beaten Down Stocks," only the inmates at the asylum would label stocks that have ripped 70% and then dropped 5% "beaten down." The truth is that a market that has rallied as relentlessly and vertically over the past nine months was bound to eventually grab a cigarette, take a break and say to itself "Whoa! Just hold on for one minute! Why the hell have we rallied so hard and so fast in such a dismal economy where most of the growth comes from inventory restocking?" Funny I've been asking myself the same question.
Friday, January 29, 2010
Equities were only marginally higher Friday morning on a better-than-expected 5.7% fourth quarter GDP growth rate. To add insult to injury, stocks failed to snap back sharply following yesterday's reconfirmation of Ben Bernanke to another term as Fed Chairman. Mr. Bernanke's reappointment guarantees more of the same bank-loving easy monetary policy which should have given financials a boost. Even great earnings reports from tech bellwethers like Microsoft and Amazon have done little to reverse the dour mood that has stricken stocks in the past week.