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Does the stock market upswing mean we are out of the woods?

July 29, 2009 by  

Does the stock market upswing mean we are out of the woods? A recent stock market rally fueled by better than expected earnings has had commentators predict the end of the current financial troubles, but some analysts caution against excessive optimism.

Surprisingly strong quarterly earnings and growing opposition to a massive government spending bill caused a more than 11 percent increase in the major indices in the course of just two weeks from July 13 to July 24, one of the largest in history.

However, some economist suggests that the rally may not last or herald a more sustained recovery as the vast majority of positive earnings results stem from cost cutting and workforce trimming.

"[Y]ou can’t keep on shrinking your way to profitability," says Steven Ricchiuto, chief economist at Mizuo Securities USA, quoted by a CNN business blog.

"Eventually, you do damage to your end users," he adds. "You have to get revenues up to have a sustainable upturn."

In fact, for many companies even while earnings have risen, actual revenues have gone down, indicating a persisting weakness in demand.

Ultimately as long as unemployment remains high, squeezing wallets and consumer confidence, any stock market rally will be temporary, analysts believe.

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  • Suddencall

    I believe that the health bill in congress is going to take away some the health care that we now have.No health care bill needs one thousand pages ,when we already have healthcare vlaws that are working fine for thje last forty years.what this congress is doing is calling this a health care bill when actually it is not.The con game in congress is alive and well.

    • JOE

      You are right,our government as the best medical care and they pay nothing for it and they willnot be under the same one we are. When will we be calling them “”COMRAD””

  • Shawn Waters

    This is just the lul before the storm! Look at what happened in 29, it did the same thing. In 30 & 31 it looked as if we were going to recover, HA Ha! It got even worse! And the only thing that got us out of it was the war. But this is not the 30′s and with the debt that we are in & our brave men all over the world plus the fact that we have such a multy racial mix & most people in this country would never sacerfice as we had to do in WWII. It will just not work. I am scared to death that America is dead. I hope & pray every day that I am wrong & I have been doing my best to warn everybody in my contacts sending them the truth about what is happening & asking them to forward it to everybody in there contacts. I do not know if it is going to do any good, but I am not just sitting by and letting it happen to this once Great Nation.*

    • http://google Virgil

      Actually the worst depression in American History was in 1887. The Feds did not need to do a thing. A man came and restructured some industries and made conglomerates that brought us out! We do not hear about that depression, although even worse, because American enginuity did it and not a move towards socialism. The answer is in all our faces.. we borrowed too much and will soon pay. The world is headed for the worse financial disaster that will ever happen.

  • Ellie

    When we have “leadership” that won’t even bother to read the bill, (i.e John Conyers) what do we expect. If it takes “two days and two lawyers”, why do we need the likes of him? How many others have taken this same attitude and lack of concern over something of such great importance. What a cesspool of worthless bottom feeders!

    • Valverde

      John Conyers can’t read the bill. It becomes obvious when you hear him talk. Why he keeps getting elected I will never know.

      • s c

        Because politics is based on the premise that budding career politicians will go to bed with anyone, at any time and for any reason, this is why some people are so adept at getting elected and re-elected. Talent has nothing to do with it. I wouldn’t be surprised to see chimps ‘running’ for office in the near future. After all, Darwin’s disciples need to be placated. We might even see trees being given ‘rights.’ Maybe pet rocks would make good candidates, too. Until b o’s supporters see him for who and what he is, life will get crazier with each passing day. How rare to have such true talent and intelligence, all in the same Harvard package.

    • JOE


      • Bails

        Yeah…what Joe said!!!

  • Duane Steil

    The recent stock market upswing means that the government through it’s clandestine brokers are flooding the stock market with so-called money. This market flooding strategy is to give we the people the illusion that confidence in the economy is returning. Comrade Obama and his administration are also trying to convince we the people that unemployment is economically meaningless measurement and the stock market rules in the Union Of Socialist America’s (USA) future.

    • Brian Rawls

      lol That is sad but true.

    • Valverde

      BTW, it is Comrade Obamavich. Barackyev Obamavich.

    • JOE

      Rmember what the Russians said some years back, we will take yoy without firing a shot and COMRADE OBAMA and the rest of the IDIOTS running this country could give a fat rats behind what happens as long as they have their power.

  • s c

    The short answer is NO. The long answer is NO. If you recall, we’ve aready been told by one of b o’s czars that “they turned around the economy.” That’s a LIE. Where are the 6 million jobs they’d have to produce to be right? Even B O himself said he doesn’t look at the stock market as an indicator. So, if you can read between the lines and the government hype, this ‘upswing’ is a glitch, and those pathetic, lying, back-stabbing sons-of-glitches in Washington will always tell you anything you WANT to hear. FORGET hearing what you NEED to be told. An immoral, unjust amd incompetent government will NEVER be your friend or tell you the TRUTH!

  • Marty

    Being a small business owner I understand that my greatest monthy expense is human resources. I can make significant cuts in my staff and save tons of money which falls to the bottom line called profits. After about 30 days my business would plunge into losses because I don’t have the staff to manage my business. Therefore I can only cut so much before it impacts my profits in a negative way. In my opinion this stock market rebound is only temporary. Take your profits and hang on. It’s the Carter administration on sterroids and these guys are not stupid. IGNORANT yes, but not stupid.

  • Marty

    I hear the frustration and the fear. What is anyone doing about it? Are you attending any opposition party meetings, political functions or what? I’m asking because I want to do something about it and not feel helpless in the face of the NAZI’s (National Socialism) now in charge of our government and more specific to the Democrat party.

  • mindy rodriguez

    john conyers might not have the ability to read 3200 and understand but you better believe 10 million seniors have read it and understand it reallll welllll !!!! no wonder he doesn’t want to read it…he doesn’t want the responsibility of sending 10 million seniors to an early death with this substandard, only for the young, no costs for mri, scans, broken backs, broken arms, heart replacements duty to die bill! As if that is bad enough…this bill will give them authority to remove funds from individuals banking accounts electronically at a real/time pace! CASH IN ALL YOUR CD, IRA, 401, SAVINGS, STOCKS, BONDS…I AM NOT GOING TO LET THE FEDS TOUCH MY MONEY WHEN I SICK, READY TO DIE OR DEAD! THE FEDS WILL NOT BE ABLE TO TOUCH ANYTHING OF MINE…ALREADY GIVING TO MY RELATIVES!

    And then…you’ll love this one…we have 9.5 million Americans out of work but they are not giving this Americans the job of sellings this plan to individuals…they are hiring acorn, americorps, etc! That’s probably because as hard as times are for the 9.5 million Americans out of work…they care for the rest of us and don’t want any of us to have to live under the redistribution of health plan!

    And poor old CBS, ABC, NBC, MSNBC, CNN are going to jump the rope for obama and put him on prime time television so he can sell the duty to die plan….you would think these television anchors and owners had enough brains to know if they want to survive they would be wise to be on the side of the important majority, the American people!

  • jenny

    please election in november, those who are running again , count them out. stop eeelecting the same people and do your home work. read about these people who are planning to run our country. they say any thing they think you want to hear and its all lies. we heard it at the last election. change . change . change. yeah, we sure did get change, our country is no longer the same country i know for 60 years.

  • Rick

    The only relatively safe economic bet is gold, but with a lot of volatility at the over $1,000 per ounce break point. Gold will stay high for the forseeable future, because the dollar’s going to remain weak in the face of the continuing high federal deficit and especially when “stage 2″ of this Great Recession kicks-in. Gold stocks are a good way to invest in gold. You can always buy the real stuff, but be careful, a lot of 1 oz. gold bars are Chinese fakes. They even replicate the “Credit Suisse” stamps and numbering system, so you can’t tell the difference. These “faux” gold bars are real gold on the outside to a certain depth, but 50% of their core is lead! So you’re getting about half the value you pay for! Better choice for gold bugs is gold coins you can buy directly from banks or reputable coin selling firms. The Canadian Gold Maple Leaf is my favorite: easy to buy, too.

    I’m betting on a long recession, and a return to tariffs and other trade protectionist measures to shore-up U.S. employment numbers. Trade protectionism will be bad for big business initially, but when corporate leaders take advantage of newly guaranteed internal U.S. markets at higher prices, this will eventually improve their bottom-lines. Again this echoes the 1930s.


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