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Rosenberg: Stock Market Ahead Of Itself

By    |   Monday, 24 Aug 2009 12:19 PM

Gluskin Sheff Chief Economist David Rosenberg says the stock market rally is ahead of an actual economic recovery.

"We have never before witnessed a stock market rally of this magnitude over such a short time frame; and absent anything more than tentative signs of economic improvement," Rosenberg writes in The Big Picture blog.

"The only rally of this magnitude was the wild bear market rally ride in 1930, which was followed by a resumption of the decline that finally bottomed 82 percent lower in 1932."

The market appears to be responding to a consensus of economic forecasters, 90 percent of whom believe the recession will this quarter, Rosenberg notes.

“Of course, like the dog wagging its tail, the group is taking its cue from Mr. Market; and Mr. Market in turn is taking his cue from them … talk about a symbiotic relationship!” he says.

Rosenberg points out the market is ahead of the economy because real GDP, bank lending, corporate profits and employment are trying to make cycle lows and the manufacturing is off the low but still below 50.

A double-digit Wall Street surge will foreshadow a general economic turnaround over the next nine months to a year, says securities analyst M. “Jake” Dollarhide.

“It’s not just because the economy’s good or bad,” Dollarhide told The Journal Record.

“It’s just pent-up demand for stock. There’s a lot of reasons to be optimistic, particularly if you’ve been knocked around the last two and a half years.”

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Gluskin Sheff Chief Economist David Rosenberg says the stock market rally is ahead of an actual economic recovery."We have never before witnessed a stock market rally of this magnitude over such a short time frame; and absent anything more than tentative signs of economic...
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2009-19-24
Monday, 24 Aug 2009 12:19 PM
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