Tuesday, November 04, 2008

Levitating on Election Day

The Dow rallies of the past two days defy conventional explanation:

Investors believing that Wall Street is on the verge of a yearend rally piled into the market Tuesday, brushing off more weak economic data while they scarfed up stocks and propelled the Dow Jones industrials up 300 points to its highest close in four weeks.

I've said it before, and I'll say it again. Recent economic data does not support this kind of optimism. Today the U.S. Commerce Department has reported two straight months of declining factory orders, worse than the forecast. Yesterday the ISM manufacturing index declined for the third month in a row. What gives?

Maybe investors are hoping that President Obama (I'll go ahead and predict his victory) will start paying their bills. This woman obviously thinks he will:

"The market can stay irrational longer than you can stay solvent." The lady above is irrational but thinks she will now be guaranteed solvency. Welcome to insolvency, America.