Markets Soar To Within 10% Of New High As Bears Appear To Be Giving Up The Fight

Laszlo Birinyi sees the bears finally starting to give up as their excuses of thin volume and lackluster earnings are just not holding ground. He says the Fed’s policy of holding interest rates near zero is helping the economy grow and corporations earn profits.
Gross domestic product (GDP) is expected to come in at 2.2% this year. Earnings on the S&P could come in at $103.48, the highest ever based on compiled estimates by Bloomberg.
But even Birinyi was surprised at the strength of the rally on the news that Europe is putting in place a bond-buying program to help distressed debtor countries. He says the rally is not just on price but also on a broader number of other factors.
The market has climbed the traditional wall of worry with so many doubting the market could perform as well as it has. While profits may end up declining by 1.7% in third quarter, the last quarter of the year should see a rebound of 11%. That growth should hold during 2013 and rise to 12% during 2014.
Although there seems to be an overall trend for investors to pay more attention to earnings, the rally over the last couple days on the news from Europe still shows that economic news has, at least, a significant short term effect.


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