Sitting here watching CNBC's Erin Burnett raving
about today's Wall Street surge -- DJIA
up by more than 150 points as of 3 p.m. -- my natural
pessimism looks for the cloud behind the silver lining.
Having spent the past few days wading through financial news, I'm
now seeing this:
- Stocks up;
- Dollar down;
- Oil, gold, other commodities up;
- Bonds still slightly jittery.
A few months ago, when I asked a private-sector economist what he
thought of the policy now being pursued by the Fed, Treasury and
Congress, he answered: "They're trying to re-inflate the bubble."
That stock prices could go up as a result -- the deficit-funded
flood of currency being partially diverted into securities -- is
certainly a possible consequence of this inflationary policy.
Well, good news for those who bought low (in March) and are now
in a position to sell high. But does this mean that the
market "bottom" is behind us and recovery awaits around the
proverbial corner? I'm not persuaded. Today's rally is chiefly
being attributed to good news from China, an independent
variable. If I were playing the market, I'd be watching bonds very
closely. The bond market is the canary in this fiscal
coal mine.
The happy bulls need not let a stubborn bear spoil their
happiness. Heck, even bond-watcher Rick Santelli was a bit
more optimistic today. But focus on the objective fact:
Everything looks like good news when Erin Burnett is reporting
it.
