The Dow Jones Industrial Average plummeted to a 12-year low of 6,547 a year ago last spring. A day later, Citigroup (C) stopped the market's drop with news that it was turning a profit, notes economist Edward Yardeni.
And that began the end of the Great Recession and the beginning of the Great Rebound, says Yardeni, who offers up a stunning list of edifying economic data noted below.
The bulls are on the march and the bears are on the run.
When the tape punches through 11,000 is the hottest debate on the Street right now--and whether it stays above that level.
But these are unnatural markets. We are not in the midst of the normal dynamics of boom and bust cycles.
Because what's put plenty of starch in this supposed snap-back rally, of course, is the Federal Reserve and the US Treasury's massive intervention into the US economy.
Diagnosed incorrectly, capitalism wasn't the problem here--crony capitalism was.
Fannie Mae (FNM) and Freddie Mac (FRE) are portraits in maximum of that sickness that only now Treasury Secretary Timothy Geithner has finally given truth to the lie to, that these two really are politically captive hedge funds hard-mirroring Congress's every housing whim, and they have the "explicit" backing of you, the US taxpayer.
Government's Pre-Existing Condition
And as it's a pre-existing condition of the Congress and Obama administration to systematically deficit spend their way into the history books as the worst fiscal dipsomaniacs in the history of the US, the bond market is seeing a very crowded trade.
Especially as baby boomers retire en masse and the Social Security trust fund must redeem even more Treasury bonds in order to pay these boomers in cash, flooding the system with a gushing fire hydrant of paper.
Hamstringing the economy, too, with an idiotic health-care law that ignores the Republicans' free market ideas. Yes, outlawing insurers who won't cover pre-existing conditions and stopping insurers from dropping the sick is the right thing to do.
But this reform ignored tort reform, it ignored letting Medicare negotiate cheaper drug prices, it ignored allowing cheaper drug importations. And brought under the Constitution's interstate commerce clause, it ironically does not let people buy cheaper insurance across state lines.
And it is a bill so fogged through with regulatory vaporware and government bureaucracies that it threatens to give the brittle economic recovery a transient stroke.
Because most elected officials are lawyers, they gave birth to a top-heavy, conflicted health-care bill, only now being X-rayed for its unintended consequences since it was released with just 72 hours notice before the vote.
Grassley, Coburn: Health Reform Doesn't Apply to the President
Political prose was formed "to make lies sound truthful and murder respectable, and to give an appearance of solidity to pure wind."--George Orwell, "Politics and the English Language"
Instead of helping you with full disclosure on the massive spending architecture they wrought, elected officials, in a nimbus of narcissism, herniated themselves to spend exponentially more time on their tedious orgy of self-righteousness for the TV cameras.
Like a cuttlefish spurting out ink, as Orwell wrote, the political class in DC are deceiving you when it comes to health reform's unintended consequences, and the fact that the IRS got a bigger nightstick to enforce a bill that many in Congress voted for without reading (see column "IRS Gains Broader Powers Under Health Reform.")
Meanwhile, according to Sen. Charles Grassley (R-IA), the Administration, meaning the president, the vice president and the Cabinet, would not have to enroll in their own health insurance exchanges, a stunning bit of hypocrisy he and Sen. Tom Coburn (R-Okla.) are now battling to stop.
Worldwide Government Bubble
Meanwhile, the US government has been borrowing at teaser rates because investors around the world view us as a safe haven.
You don't see a flight into rupees or roubles or even the euro, as Europe's rickety monetary construct is clearly built on the styrofoam of shoddy accounts from Greece, Portugal, Ireland, Italy and Spain.
But no rational thinker on the Street believes the US's teaser rates for its borrowing will last for long, as governments around the world also believe issuing bonds and spending their way into insolvency is the best course to liquefy their economies, instead of nurturing their private sectors.
We are in a worldwide government bubble, as nations issue an estimated $5 trillion in new debt to deal with their economic crises.
The US's borrowing, at $12 trillion, is on a collision course with its gross domestic product of $14 trillion, not counting unfunded liabilities for Medicare and Social Security, which could block out Jupiter.
Stop the Cultural Drift
Yes, the US has been battling the rarest of economic events, a concomitant credit and housing crackup.
But this country must stop its cultural drift into a soft bailout nation always looking for a handout, and come back to its roots as a rugged, independent, entrepreneurial country, where optimism courses through its DNA.
Because it is you who must pay that bar tab, as the US collects just $2.4 trillion in total tax revenues from everyone, taxpayers, companies, you name it.
Street: Semper Fi
Yes, a decade-long secular bear market began with the bursting of the Internet and telecom bubbles.
Yes, many on the Street believe the current updraft marks a cyclical bull market rally within the context of a secular bear market.
But maybe there's more to this.
Maybe the Street is putting its faith in the future of this country.
A Remarkable Year
The Dow has rocketed 61% in a year, the kind of gain that would normally come in five or six good years, Yardeni notes.
The Standard & Poor's 500 index — the basis for many retirement accounts and mutual funds — jumped 20.% in the first 10 trading days after the March 2009 low. It's now up 68%.
Here's a by-the-numbers look at one of the most remarkable years in the history of the stock market, as compiled by economist Yardeni:
$5.6 trillion: Total gains in the stock market since March 9, as measured by the Dow Jones U.S. Total Stock Market Index, which tracks nearly all U.S.-based companies.
$5.6 trillion: The amount that stocks are still down from October 2007, when the Dow peaked at 14,164.
83%: Amount the technology-dominated Nasdaq composite index is up since March 9.
98%: Number of stocks in the S&P 500 index that are up since March.
24%: Number of stocks in the S&P 500 index that are up since the market's peak in October 2007.
129%: The average gain among financial stocks — the best-performing industry group in the S&P 500 index.
97%: The average gain among consumer-discretionary stocks, which includes retailers.
17%: The average gain among telecommunications services stocks — the worst-performing industry group.
1,701%: Gain in shares of Genworth Financial from 91 cents to $16.39, through Friday. The best performer in the S&P 500 index.
647%: Gain in a share of Ford Motor from $1.74 to $13.00.
345%: Gain in a share of Bank of America Corp. from $3.75 to $16.70.
121%: Gain in a share of General Electric from $7.41 to $16.35.
14%: Gain in a share of Wal-Mart Stores from $47.51 to $54.14.
-$1.55 billion: Net cash flow for stock mutual funds, representing the money put into funds minus the money taken out.
$386 billion: Net cash flow for bond mutual funds.
18-20: The historical average for the Volatility Index of the Chicago Board Options Exchange, also known as the VIX, or the market's "Fear Index."
49.68: Where the VIX stood a year ago.
17.42: Where the VIX closed on Friday.
$918: The price of an ounce of gold a year ago.
$1,135.20: The price of an ounce of gold on Friday.
8.2 %: Unemployment rate as of February last year.
9.7 %: Unemployment rate as of February of this year.
-726,000: Jobs lost in February last year.
-36,000: Jobs lost in February of this year.
-$202.1 billion: Losses of the companies in the S&P 500 index in the final three months of 2008, a record.
$132.7 billion: Estimated earnings of the companies in the S&P 500 index in the final three months of 2009.
$1.26: The amount it cost to buy one euro a year ago.
$1.36: The amount it costs to buy one euro now.
25.3: Consumer confidence a year ago — a record low.
46: Consumer confidence today.
90: Consumer confidence number that economists believe signifies a healthy economy.
5.15 %: Average rate on a 30-year fixed mortgage last year.
4.97 %: Average rate on a 30-year fixed mortgage now.