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Kessler: No Bull Market Yet

By    |   Tuesday, 12 May 2009 11:01 AM

Former hedge fund manager Andy Kessler says the recent market upswing is a sucker's rally, not the start of a new bull.

The stock market still has big hurdles to clear, Kessler writes in The Wall Street Journal — and there are no sustainable, fundamental reasons for the market's continued rise.

“Earnings are subpar,” Kessler points out, adding that weak demand made Treasury's last auction a bust, the dollar is suspect, the stimulus is pork, and the latest budget projects a $1.84 trillion deficit.

“Until these issues are resolved, I don't see the stock market going much higher,” Kessler says.

Moreover, the market appears dependent on the Fed cranking out dollars to help fund banks. And by driving interest rates to almost zero, the Fed has messed up asset allocations.

“I'm not disagreeing with the Fed's policies, but I won't buy into a rising stock market based on them,” Kessler says.

“I'm bullish when I see productivity driving wealth.”

April saw the lowest level of insider buying ever recorded by research group TrimTabs, the Financial Times reports.

Insider selling was 14 times as high, and companies sold 64 per cent more shares than they bought.

Investors’ expectations of a sustainable rebound got a boost from the fact that U.S. stocks touched a 13-year low in March.

That was also the case in 1974, the beginning of a long rally that lost steam after a 73 per cent gain in two years.

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Former hedge fund manager Andy Kessler says the recent market upswing is a sucker's rally, not the start of a new bull.The stock market still has big hurdles to clear, Kessler writes in The Wall Street Journal — and there are no sustainable, fundamental reasons for the...
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Tuesday, 12 May 2009 11:01 AM
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