The Biggest Disconnect of All Time
by Mike Larson Fri. October 1, 2010
I’m seeing one of the biggest disconnects of all time — between the underlying U.S. economy and the performance of the stock market. Just consider what we’ve learned about the economic fundamentals in the past several days …
• Consumer confidence plunged in September — to 48.5 from 53.2 in August. That was far below the 53 reading economists were expecting, and the worst in seven months.
• The Richmond Fed’s manufacturing index plunged from 11 in August to NEGATIVE 2 in September. Economists were looking for a reading of 6. That was the worst since January. The report followed a dismal Dallas Fed reading from a day prior. That region’s index tanked to -17.7 from -13.5 in August.
• The housing market? Yeah, it still stinks. New home sales flat-lined at 288,000 in August, the second-worst month in U.S. history. Home prices fell to their lowest level since December 2003. Builder confidence held at the lowest level since early 2009. Existing home sales bounced a bit, but they recouped less than a third of their 27 percent July swan dive.
In other words, things aren’t getting better in the real world. They’re getting worse! But on Wall Street it’s party time. Investors are essentially the most bullish they’ve ever been. And it looks like September 2010 could be the best for stocks of any September in seven decades.
What’s going on?
Lee sorry for the long post but mike’s thought were good to share…LB BEAR