Saturday, December 26, 2009, 3:13PM ET - U.S. Markets Closed.

Holy Cow, We've Found a Bull

Posted May 05, 2009 02:25pm EDT by Henry Blodget in Investing, Recession, Banking

SOMEONE has driven the market up 30 percent in the past two months--just not a lot of the folks we often talk to.

Maybe it's Jeff Matthews, hedge fund manager at RAM Partners and author of "A Pilgrimage to Warren Buffett's Omaha."

"It's for real," says Matthews about the market's recent rocket ride. He goes on to say the rally has all the hallmarks of a standard cyclical recovery:

  • Financials and consumer stocks rallying
  • Crappy stocks rallying
  • Credit markets loosening up

The last part's the most important. Last time Jeff joined us, in the depths of early March, he said what we'd need to see to get a real recovery was the return of credit availability. Now it's back, he says. As evidence, he points to LIBOR and the 3-4 emails he gets every evening from brokerage firms like Merrill announcing another slew of companies planning to tap the equity and debt markets to raise money.

If companies can raise money, it means investors are willing to put money to work again. It means companies can start spending again, instead of hoarding every nickel for the second Great Depression. It means that, in fact, the rally MIGHT be real.

So here's hoping Jeff Matthews Is Not Making This Up.

154 Comments

Heroine Worshipper
Heroine Worshipper - Tuesday May 05, 2009 02:34PM EDT

Well, the price of everything is up 30% in the last 2 months. It's called printing $300 billion to fund the economy.

Gusserson
Gusserson - Tuesday May 05, 2009 02:35PM EDT

BULL Spit

L
L - Tuesday May 05, 2009 02:40PM EDT

...nope...consumer is still suffering from loss of equity, decreased credit line (credit=money) and unemployment is still rising...we have merely managed to 'hide', for the time being, the depth of the losses on the books, both as consumers (think of all those underwater mortgages tied like a noose to the conumers' necks) and as banks (think 'stress test' not stressful enough)...there are 'numbers' and 'real numbers'...we have merely reached terminal velocity after falling off the cliff...

TylerS
TylerS - Tuesday May 05, 2009 02:40PM EDT

Hedge Fund Manager! Remember what Cramer said about Hedge Fund Managers? I call shenanigans.

Yahoo! Finance User
Yahoo! Finance User - Tuesday May 05, 2009 02:40PM EDT

How will this stop real estate from sliding? How will unemployment stop increasing? What will stop coroporate real estate foreclosure? What will stop state governments from going into debt? What technology fundation are we building off of? What will stop the auto makers from going out of business? What will stop inflation once a recovery starts? I sure wish I could understand the optimisim?

Yahoo! Finance User
Yahoo! Finance User - Tuesday May 05, 2009 02:42PM EDT

Hopefully household income can rise http://www.incometaxlist.com/ It has been flat for years, ONLY rising income can help

blank
blank - Tuesday May 05, 2009 02:42PM EDT

isnt it a bit late to tell us this henry. OMG. the first positive guy in 2 months. i didnt buy. i want to cry. i listened to you, roubini, aaron. what a dumb ass i am. so is this a suckers rally? i am the sucker and its rallying.

Red W. Blue
Red W. Blue - Tuesday May 05, 2009 02:43PM EDT

TAX THE RICH as an agenda has got to die a quick death!

L
L - Tuesday May 05, 2009 02:44PM EDT

...nope...consumer is still suffering from loss of equity, decreased credit line (credit=money) and unemployment is still rising...we have merely managed to 'hide', for the time being, the depth of the losses on the books, both as consumers (think of all those underwater mortgages tied like a noose to the consumers' necks) and as banks (think 'stress test' not stressful enough)...there are 'numbers' and 'real numbers'...we have merely reached terminal velocity after falling off the cliff...

Yahoo! Finance User
Yahoo! Finance User - Tuesday May 05, 2009 02:44PM EDT

unbelievable rise based upon debit and Govt borrowing

Yahoo! Finance User
Yahoo! Finance User - Tuesday May 05, 2009 02:44PM EDT

A lot of cash on the sidelines, and the treasury printing presses are going 24/7

Len T
Len T - Tuesday May 05, 2009 02:45PM EDT

So what is he saying? That we are going to have a V shaped recovery? That the recession is over? Didn't all of the experts on Tech Ticker say that it'll be a L shaped recovery lasting for years? Sheesh. It just shows you that if you get enough of a variety of expert opinions. at least one of them will be right. Then they will be interviewed on tech ticker as the "I told you so" expert. lol

Len T
Len T - Tuesday May 05, 2009 02:47PM EDT

So what is he saying? That we are going to have a V shaped recovery? That the recession is over? Didn't all of the experts on Tech Ticker say that it'll be a L shaped recovery lasting for years? Sheesh. It just shows you that if you get enough of a variety of expert opinions. at least one of them will be right. Then they will be interviewed on tech ticker as the "I told you so" expert. lol

Mysterious J
Mysterious J - Tuesday May 05, 2009 02:47PM EDT

The price of everything is up 30% in the last 2 months? Really? Housing is up 30% in the last 2 months? Gasoline? Gold? Flat-Screen TV's? Aircraft parts? Brake pads? Milk? All up 30%? Dang, that was fast. Look, there's no question in my mind that we're seriously off the rails right now, but it sure doesn't look like price inflation is the big worry today.

TylerS
TylerS - Tuesday May 05, 2009 02:48PM EDT

Well Jeff. I am on the buy and hold stance. But I still think the market is going to drop. Recovery happening? yes, but there is still too much bad data that can weigh the market down. Unemployment and National Debt are two major pieces of information. The ability to lend is great, but if people decide to default, that is gonna be hard. There are going to be two real stress tests this year. This summer when travel should be at it's highest, and this fall when everyone turns inward to home. At either of these times the market could stress out and bust again. So, while I say "Yes, the recovery is close, go ahead and buy!" I could not think that we are not attempting to 'stand on shallow water'.

binderzz
binderzz - Tuesday May 05, 2009 02:51PM EDT

Sorry, but yesterday (Monday, 04May09) was the blow off market top. We're beginning the 95% retrace back to 690-750. The more of these "hedge fund experts" who are showing up to tell some of us (the average retail investor who bailed last Jan-Feb and has sat out the recent rally) it's finally time to all pile back in because "the market's only going up from here" is only more proof the top's in and it's time to be short or in cash. The only mystery is, are these people wrong only because they're human like the rest of us or is something more sinister going on as when the GS tells the public to "buy" when they're telling their paying customers to "sell"?

Andrew
Andrew - Tuesday May 05, 2009 02:51PM EDT

responsible consumers are doing fine, we survive. If I purchased a house at the top of the market, I should be in trouble. If I bought a stock at the top and it goes down, noone will bail me out then will they? Go DOW GO!

mmark
mmark - Tuesday May 05, 2009 02:51PM EDT

be very cautious. put in a little bit at a time. sell when your stock has gone up by 25-50%. no reason to be too long. if your wife likes it long, then go long. :)~

Yahoo! Finance User
Yahoo! Finance User - Tuesday May 05, 2009 02:52PM EDT

The really IS real and it will be raining a deluge of dollars this summer.

Brian F
Brian F - Tuesday May 05, 2009 02:52PM EDT

How about next doing a story about how and why we can trust the tech ticker? There is no reference point for any of this stuff except that some people think they're wrong all of the time or wonder why they are not reporting on "tech stuff" as it still says in their byline on Yahoo.

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