Mixed Signals

Who's right - the bond market or the stock market? The bond market says we're still in a recession or worse; The stock market seems to be holding onto the hope of a sustainable economic recovery. If you haven't read David Rosenberg's column today, it's worth a read.

Now David does mention the 'D' word, but I don't think he's too far out of line: "True, we can’t see the soup lines; but the soup lines are in the mail – 99 weeks of unemployment cheques for more than 10 million jobless Americans. Don’t be lulled into the view that we are into anything remotely close to a normal economic cycle."

It seems to me that interest rates have been at record lows for what must be a record amount of time, and yet the economic data is rolling over despite all the fiscal and monetary stimulus. Rosenberg puts it this way: "In a recession, the economy is revived by government stimulus. In depressions, the economy is sustained by government stimulus. There is a very big difference between these two states."

Bottom line - Rally's are still something to be sold into.

GB