Best description of it – and its not even meant as such:
U.S. stocks rose, while Treasuries and the dollar slipped, after a rebound in oil and natural gas spurred investors who pushed the Standard & Poor’s 500 Index up 52 percent since March into more bets on riskier assets.
The S&P 500 erased its steepest drop in two weeks to add 0.3 percent, rising for a third day. Crude for October delivery jumped 1.5 percent, reversing a 2.2 percent loss, as speculators bought the contract after it held above $70. Natural gas surged 4 percent in less than 30 minutes, erasing most of a 7.5 percent drop as front-month futures expired.
“This whole rally since the March lows has been extraordinarily highly correlated,” said Liam Dalton, who oversees about $1.1 billion as the New York-based chief executive officer of Axiom Capital Management. “When the commodities go up, it encourages people to think the growth factor is returning globally and they invest in stocks. One feeds into the other.”
One feeds into the other, indeed – that is what is happening here. News gets out there which, at a glance, might indicate a change for the better, and people who want to get back to where they were before September’s crash jump on it…forgetting, for instance, that the recent rise in durable goods orders was fueled by “cash for clunkers” car sales. It won’t happen, again, because people are not buying. Not too long ago, the market jumped on the news that oil stocks are lower than expected – without anyone noticing that stocks are low because refiners stopped buying because there’s less demand for the end-products of the oil.
Stupid really is as stupid does – and investors pushing this market up are being exceptionally stupid. I’m out – and I won’t get back in until I actually see something which indicates an economic recovery. You know, such as something like less than hundreds of banks on an FDIC watch list…or, maybe, when I stop seeing houses like mine going for less and less on the market. Call me screwy, but I’m just not buying what the stock boosters are selling.
UPDATE: Perhaps this Blind Rally is coming to an end? I hope so – the more it goes up, the worse people will get burned.
UPDATE II: Who is propping up the zombie banks? This post talks about it and wonders if the government isn’t, in some way, pumping banks like Freddie and Citi with new funds to prevent complete collapse. Could this rally be no more than central banks – here and around the world – trying to sustain the unsustainable?
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