Anatole Kaletsky: Economic view
Why have stock markets around the world just enjoyed their best two-week run since 2003? A very clear explanation appeared at the weekend: analysts said that the market run was due to one simple statistical fact: the strength of US second-quarter earnings, which have taken almost everyone by surprise.
But if this was true, it was odd that Wall Street’s biggest gains came after disappointing results announcements from some of the most closely watched US bellwether companies: General Electric, Morgan Stanley and Microsoft. Maybe the market euphoria reflected a generalised conviction among investors that the recession was over? If so, it was odd that stock markets fell sharply in June, when most of the economic figures were rather stronger than they have been this month. Or maybe the bullish sentiment was a return of confidence in the global financial system? If so, it was odd that the shares of the four most vulnerable major banks — Citigroup, Bank of America, Lloyds and Royal Bank of Scotland — are all lower than they were two months ago.
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