Can You Have a Profitless Recovery ?

Andy Kessler has an especially sharp WSJ OpEd today on whether this is a sucker’s rally or the start of something more sustainable.

Andy credits/blames 3 things for the rally: Armageddon is off the table, Zero yields, and Bernanke’s printing press. None of these represent fundamental improvement in the underlying economy or profit picture. For those of you who buy into the ancient, quaint notion that markets should operate with direct government involvement manipulation, note that all 3 of these factors are government/Federal reserve orchestrated.

I don’t often agree with Andy, but he is onto something here.


The stock market still has big hurdles to clear. You can have a jobless recovery, but you can’t have a profitless recovery. Consider: Earnings are subpar, Treasury’s last auction was a bust because of weak demand, the dollar is suspect, the stimulus is pork, the latest budget projects a $1.84 trillion deficit, the administration is berating investment firms and hedge funds saying “I don’t stand with them,” California is dead broke, health care may be nationalized, cap and trade will bump electric bills by 30% . . . Shall I go on?

Until these issues are resolved, I don’t see the stock market going much higher. I’m not disagreeing with the Fed’s policies — but I won’t buy into a rising stock market based on them. I’m bullish when I see productivity driving wealth.

Interesting stuff.

Was It a Sucker’s Rally?
WSJ, MAY 12, 2009

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