Is the stock market back?
There seems to be a good deal of commentary on this point currently, given the recent gains on Wall Street. The Economist, in an article available to all on their site, notes that some investment banks are now becoming more optimistic after a few lean years. Paul Krugman, meanwhile, argues that the recent run-up in stock prices is just another bubble.
The Wall Street Journal had an interesting piece on Monday about two fund managers in the same office who had taken opposite sides in the bull and bear debate. The article, available only to online WSJ subscribers, is here. The lead, written by E.S. Browning, makes clear the great significance of Wall Street's summer performance for the economy as a whole:
"The same kind of debate can be seen among investors of all stripes right now, reflecting the doubts that have grown as stocks have faltered for the better part of three years. In the short run, who is right will determine the success or failure of billions of dollars in retirement investments.
"But something even more fundamental is at stake: The stock market's performance this summer will be one of the main factors determining whether the economy finally takes off, or instead, sinks back into another, potentially disastrous, decline.
"'The market is going to behave like a thermometer for the economy,' says Jon Brorson, head of growth-stock investing in Chicago for money-management firm Neuberger Berman. 'Stock performance will have a profound effect on business confidence and on businesses' willingness to invest. If the rally fizzles, business confidence will ratchet down further and we will have more unemployment.'
"In Boston, careers are on the line. Messrs. Rutledge and McCormick both have seen their fortunes swing with the direction of the Dow -- and both now have staked out opposing stances at a critical time."
|
