Between a Bull and a Bear
Is it a bird? Is it a plane? Is it superman? Investors can’t seem to figure out whether the recent leaps in stock prices represent a brief uptick in a falling market or something more meaningful, even the start of a brand-new bull run. The Pavlovian impulse is to dismiss the rally as just another head fake. After all, there have been five other countertrend moves since the bear market began in October 2007, and they all petered out within a couple of months as the fundamental
backdrop continued to deteriorate. Most analysts believe the economic mess has hardly been cleaned up: the American consumer is still deep in debt, housing inventories continue to mount across the world and green shoots are sprouting only because of massive government spending.
Herein lies the key. The trillions of dollars in spending programs can indeed stimulate the economy, at least for a few quarters, reviving growth this year. The broad consensus is that the U.S.-led global economy faces too many structural headwinds to enter a meaningful expansion phase, and that likely will be correct, but in the long term.
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