The Dow Jones Industrial Average (DJIA) has climbed nearly 45 percent since hitting a March 9 low. The S&P 500 (S&P) is up nearly 53 percent. And the NASDAQ (NASDAQ) has soared a whopping 61 percent since the March bottom.
But that rally has some analysts shaking their heads. Art Cashin, a CNBC regular who also makes frequent appearances on CBS and NBC news programs to offer insight on the financial markets, was skeptical. He told CNBC's "Squawk Box" on Sept. 11 he got some of his money out of the market and got burnt, but is still scratching his head over the rally.
"Away from that, I'm still somewhat skeptical about this," Cashin said. "I've been wrong, got out too early, certainly. I took some money off the table as I told you, about a week and a half, two weeks ago. Didn't take it all off, um, may take some more off if they keep going."
However, Cashin, the director of floor operations for UBS Financial Services and a long-time veteran of the New York Stock Exchange, also said the current market is very much like the stock rally that led up to the Oct. 19, 1987 "Black Monday" crash.
"There's just some eerie things about this. It's reminiscent, believe it or not, of spring and summer of '87, when nobody believed the rally and it kept going up, despite skepticism," Cashin said. "People shorting into it - it ate them alive until it suddenly turned. And the two topics that year were the dollar and Iran."
The Dow took a 23-percent swan dive that day and Cashin explained this current rally is similar because the stock values have nothing to do with the underlying fundamentals.
"I think the skepticism really started to kick in late July and everybody was starting to worry about it because these prices have nothing to with the underlying fundamentals, you know?" Cashin said. "This is a kind of wish list rally, so we'll see what happens."
"Squawk Box" host Joe Kernen attempted to rationalize the current rally and said it was possible the markets were trying to forecast the long-term "underlying fundamentals" and that the financial markets are predicting recovery.
"Yeah - the underlying fundamentals, but we always have to point out that it's hard to know exactly what the underlying fundamentals are gonna to be in nine months from now and maybe in a mystical way, people dispute whether the market is mystical, but maybe somehow the jobless recovery isn't as bad as people thought," Kernen said. "Maybe you know, I don't know, the rest of the world recovers. We got a weaker dollar. The consumer is able to comeback quicker. Who knows what it could be? Maybe we don't know that there's better things going on and the market does know."
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It doesn't take a financial
September 11, 2009 - 16:07 ET by mattmIt doesn't take a financial genius to know that an economy which has seen skyrocketing debt, unemployment and government take-overs will sooner or later hurt the stock market.
1987 was a correction during a period of general economic growth and a federal deficit that was declining as a percentage of the overall budget. The opposite is true now, so it's not hard to imagine that the next "correction" will be much worse.
Stock Market
September 11, 2009 - 16:26 ET by merlin61Yes, mattm, you are right. I don't understand how it
can be making this rise at this time. I believe its a false
hope.
Another Crisis
September 11, 2009 - 17:00 ET by AeroSpearCould this be another crisis that was intentionally put in the works? Was repetitive bad policy purposfully pushed through to potentially put the hurt on the market, thereby manufacturing a crisis from which Washington can save us by consolidating more power.
I guess we'll see over the next couple of weeks.
definitely
September 11, 2009 - 19:09 ET by jon_torlinI have to say yes to that question, but the other question is about how Congress wants to put a tax on the investors.(as if they weren't taxed already) So far it's just an idea, but like the other ones, the dems have enough votes to make it happen and as soon as that does, it will also cause a big sell off.
Right now, the way I see it, especially with the value of the dollar still going down, the price of oil going up because the dollar losing its value since oil is mostly bought by the Euros these days, plus gold getting up to $1000 an ounce, we're sitting right on the edge of a precipice that's waiting for someone to tip us over with a feather because that's all it will take. (I know, one long sentence!)
To make it really bad, the stock market has increased its value over the years since 1987, so there's a lot more to lose which will be devastating. Think about the loss from 16,000 to 9000 where we are now (I know, not exact numbers, but you get the idea) that slowly happened once it became clear that Soetoro was going to be the front runner for the dems.
That was over a long period. Imagine how it will be once things start to happen, it will be a huge drop in a VERY short amount of time and I suspect we might see halts in the markets as a result as dictated by trading rules that start happening.
I told my dad back when 9-11 happened, he better start buying gold and he's glad he listened to me(also bought silver and other metals). I suggested that he might want to sell his stock of other stuff that he has but a little at a time, while keeping a finger in the wind to see what happens. It's ok to do something like that when it comes to trading, that's how trading works. He's already lost a good chunk of money based on paper value though.
Have to keep watch and see what happens, but I fear it will not be good.
-Jon
So the fed will not tell us where the money went.... 3 words....
September 11, 2009 - 17:18 ET by upcountrywaterPlunge protection team.
State controlled health care is Tort Reform.
The market wants Obama and Socialism to fail . . .
September 11, 2009 - 17:39 ET by KylerkI've noticed a direct correlation between Obama's poll
numbers and the market -- It started tanking around 9/20/08 - just as McCain's
bounce from announcing Palin as his VP wore off and Obama took the lead in the
polls for good. And it started to rebound right around early March when it became
painfully obvious that Obama's Porkulous bill would fail miserably and that he
was in way over his head. This was the start of a constant decline in his
approval ratings and a constant increase of the stock market indexes.
The day after his statements calling the Cambridge police "stupid", and it
was during that same press conference that he totally screwed up his message
regarding his socialized medicine plan, the market shot up 300 points the next
day!
Remember that the stock market is nothing more than an
indicator of the future, and the future is much brighter when the Socialist in
charge is in trouble.
Wall Street knows a Socialist when it sees one.
real simple
September 11, 2009 - 19:11 ET by jon_torlinThe market is based on capitalism. Socialism is not friendly to capitalism. Never has been, never will be. Re-distribution of wealth and all that rot.
-Jon
All I can figure is that
September 11, 2009 - 20:49 ET by RR GOPAll I can figure is that this is a disconnect between reality and the casino nature of the stock market.
What happens when quarterly earnings come out next time? How can many of these companies have retained their 2008 values, much less increased them?
I can't see how having millions of unemployed, looming inflation, huge federal deficits, monetization, sluggish housing market, looming income/corporate tax increases, the possibility of ObamaCare going through, Cap and Trade, and a dozen other things can possibly lead to an improving economy.
The only conclusions I can come up with are:
1. The stock values are really more of a reflection of the supply and demand for them amongst stock buyers and have little to do with the actual value of the companies and their stocks.
2. Buyers are falling for the rosy predictions of the Dem talking points, the MSM, the WH, etc.
3. Buyers are thinking, "Oh, nothing bad will happen...impossible!"
4. Folks are merely trying to buy stock for the short term and sell high in the short term before the whole thing goes to hell in a handbasket.
One of the 34% who thinks George W. Bush was a great President. One of the 86% who wants to bring back the stock and pillory.
RR
September 12, 2009 - 00:20 ET by katainkentI am not extremely market savvy but we had a few stocks awhile back that we dumped and went other avenues for savings.
My husband was watching Wal-Mart, of all things, start taking more and more of a share of the retail market sales and I was noticing that credit extentions for "same as" were getting to be 5+ yrs. It was about then that we decided the economy was probably about to tank so we took our cards off the table. We were pretty fortunate and lost nearly nothing when stocks crashed.
But since then we've holding some cash and waiting and wondering when to get back in. Right now what the market is doing makes no sense to either of us and I think you've articulated our thoughts better than anyone else I've seen.
___________________________________________
We must not let our rulers load us with perpetual debt. ~Thomas Jefferson
I am not a market guy
September 12, 2009 - 00:07 ET by richb313I am not a market guy but I think the real reason for the increase in stock prices (not rally) is due to one thing only. That thing is the dropping value of the dollar. As the dollar devalues it takes more dollars to buy the same thing. After a time it will become too expensive to buy and people won't buy anymore but will sell and then the crash.
In all the years I've been
September 12, 2009 - 07:21 ET by billbIn all the years I've been watching Cashin on CNBC, I've NEVER heard him make a difinitive comment on the market. Why now?
I'm not saying he's wrong, but I've listened to a lot of "experts" on financial networks bad-mouth the market when they've missed a rally.
Sometimes the Bulls win, sometimes the Bears win, Hogs never win. 50/50 stocks/bonds is the answer. The market is your only hedge!