It's great to see the stock market show some life, but I'm somewhat puzzled by the action. It's as though all of the sudden our economic woes have been addressed when in fact there's still very few signs that anything positive has developed.
First, unemployment remains a major problem, and the fact that there are still hundreds of thousands of people filing for claims on a weekly basis is no economic cure. In fact, numbers were released today showing that unemployment rose in 30 states, with 5 hitting records.
At the same time, many of the stimulus programs put in place to help shore up the economy are about to end, including the one time home buyer tax credit, and just when the low interest rate environment could be coming to an end. Not that I expect rates to rocket, but even a small increase in rates could have a big impact on the housing market.
Yes, we may be past the worst part of the economic problem, with the banks having weathered the financial storm, but they're still not lending; not exactly a recipe for a quick recovery.
So, the bulls should enjoy this near term ride higher, because it won't be as much fun once reality sinks in, a reality that it could be a long time before we see any real positive shift in the economy - unless the Administration figures out a way to put some dollars into the hands of consumers who just might do a better job of stimulating the economy than all of the banks put together.
marketSNAPSHOT
