After months of geo-political turmoil and natural disasters, the stock market threw caution to the wind and rose 4% in the month of April. If all twelve months were as good, we'd enjoy better than a 48% growth over a year. That will not happen, and that's a good thing. Unsustainable increases experience sudden, dramatic reversals!
First quarter earnings were good, beating expectations a whopping 73% of the time. Fed Head Ben Bernanke promised to keep the money flowing thru the end of June. And, who cares about the price of oil anyway?
In his press conference last Wednesday, the word most uttered by Bernanke was inflation. At least, he is paying attention to it. He realizes that the greatest threat to the improving corporate earnings is cost increases, creating "cost-push" inflation.
At this point, the stock of large companies are only 10% of their all-time high in October of 2007. The stock of small companies has already reached it's all-time high. One leading strategist has declared we are not seeing a recovery but an expansion, meaning we are fully recovered from the Global Financial Crisis and are now growing. I hope he is right but doubt it, not with fourteen million people jobless.
