The show goes on, not wanting to miss the next move up, cash on the sidelines are now being moved into stocks. Yesterday with the DOW down 100 points could have been the perfect excuse to to start taking more money of the table, but instead it was a buying opportunity and we ended up being small down for the day. This morning Eurostoxx was down 18 points now up 35!
With good earnings and imrpoving data, looks like 10000 will come sooner rather then later, as I said yesterday, and then the bomb will drop and we will fall hard.
Unless unemployment improves, this is going to be one of the biggest snags on this recovery. It could mean the economy itself may not be on the road to recovery everyone is hoping for. As yesterdays WSJ points out, unemployment is seen as a lagging indicator, but lower payrolls have provided a revenue cushion for companies:
According to Deutsche Bank's calculations, 82% of the S&P 500 companies to report so far have beaten second-quarter earnings expectations. The snag is that only 50% have beaten sales targets.
For the moment, earnings are only being held up by costs shrinking fast alongside revenue. For a true recovery, sales need to start growing, too. Rising unemployment may make that harder to achieve.
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