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Market Bears Need a New Tale


Stocks don't care what you think, no matter how smart you may be. The markets is incapable of being irrational, depressed or complacent. The market just is; it's the investor who's right or wrong. The rally since the beginning of June has been characterized by two things: lousy data and whining bears complaining about what the market should be doing.

Here's what investors already know:

* The entire global economy is a den of horrors. Evidence to the contrary is welcomed but scarce.

* The Fiscal Cliff is the debt ceiling debate part II. The outcome will be a humiliating and futile period of negotiation, that will put off any hard decisions for some time in the future.

* Unemployment is high and probably understated. It's getting neither worse nor better. That fact is lamentable but has been the case since 2008.

* Earnings were dismal, at best. Revenues were lousy and earnings are a function of "cost controls" which generally means firing people.

Brian Gendreau, market strategist at Cetera has two decent reasons to stay at least moderately bullish, one addressing the domestic economy and one for the rest of the world.

Yes, the U.S. is a mess but "stocks have actually in the post-war period returned an average of 8.1% in periods of 0 to 2.5% GDP growth." You folks in the camp claiming there's a recession happening right now need to wait for at least one negative GDP print prior to opening your gob.

The looming economic and human disaster in the rest of the developed world, while tragic, isn't necessarily bearish. Yes, it destroys exports and global demand. It also leaves U.S. stocks the best of a pug ugly breed.

"Growth in the United States, tepid as it is, is still stronger than elsewhere in the world," observes Gendeau. It's not an Olympian rally cry but "we're less doomed than you" works for our purposes.

It's not all-clear. There are real problems. What's different now than in 2008 or even last year is that nothing is catching investors by surprise. A housing meltdown and European disaster weren't cocktail party chatter prior to crashing the markets. Now they are.

Stocks are overdue for a pause but unless or until bears come up with something else to complain about, they're destined to spend more time growling than they are eating.