Vincent Farnsworth 6:31 p.m., Dec. 4
Recent Good News Really Isn't So Great, Say Two Pros
The stock market has moved up 20.35 percent in the last four weeks -- the biggest percentage gain since 1933. Bulls are exultant. But gains or losses that are the biggest since the Great Depression aren't so confidence-inspiring. Last fall, we experienced huge one-day rallies that were the biggest since the Great Depression. Stocks tend to have fast rides up and down in a depression. To some analysts, there has been a string of good news. But E. James Welsh of Carlsbad's Welsh Money Management, who has had an excellent record in recent years, points out that the cheers really aren't justified. For example, consumer confidence was 25.3 in January, the lowest number since records were first kept in 1967. In February, the number went to 26. "Yippee!" harrumphs Welsh. Last week, the stock market ignored three consecutive dismal days of employment news, culminating Friday with the announcement of a loss of 663,000 jobs in March. Welsh notes that the average work week dropped to 33.2 hours, a record low. Factory orders recently rebounded, but "nobody seems to have noticed" that durable goods order backlogs are down for five months in a row, notes David Rosenberg of Merrill Lynch, who has called the recent downturn accurately. Home sales are ticking up, but to their second lowest level ever. With 45 percent of sales foreclosure-related, prices are dropping, as S&P/Case-Shiller report. So foreclosure-related lower prices are stimulating a very modest increase in home sales -- again, nothing to rejoice about. Both Welsh and Rosenberg remain skeptical about the stock market. And, given the horrible employment numbers, they look for the economy to remain ill.