Tuesday, July 17, 2007

Ain't no stoppin' it

Despite the surge in U.S. equity prices, the record levels of margin debt, and the ongoing growth of bets against the market through puts and shorts, the market may well continue to defy the skeptics view of gravity. The following news is on the wire today:
---Merrill Lynch earnings rise 30% and beat analyst estimates handily
---the producer price index falls easing worries about inflation
---data shows foreign buying of U.S. securities rising, with the greatest growth in equities
---Reid of the Senate announces that their will be no vote on hedge fund taxation in the Senate this year as any bill should focus not just on one sliver of the investing business but on the overall spectrum of activities, including venture capital and real estate and energy partnerships as examples.

This is all good news for the U.S. equity market. Eventually there must be a correction of some level as profit taking will become an option that is too compelling to ignore. Profit taking could be just that, and create another base for growth. For now it seems that any significant correction, however much the wise sandbaggers want it, will require some significant negative news as a catalyst.


Anonymous Stan the Man said...

What people don't focus on is that the equity market is still at a relatively normal level by price/earnings multiple standards. It's not like 2000 or anything close, so it won't go down much until everybody thinks that earnings are going down. For companies that are spread out internationally this may not happen. I like this market and nitwits like that short seller David Tice know nothing.

1:17 PM  

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