The market opened strong and pretty much stayed that way, with the Dow up 123 points at the close. Some sort of rebound had been in the cards, though the prevailing mood remains tentative at best. When the best economic news of the day is a retail sales report that's not as bad as had been expected, you know expectations are pretty low. Hedge fund investor Felix Zulauf sums up the climate in this week's Barron's:
I am in a good mood but I feel sorry for the world. The global economy's structural problems haven't gone away, and the authorities continue to kick the can down the road. They go from one quick fix to the next. Quick fixes have worked well in the past two years, and might work a bit longer. But at some point we will have to face reality, and that will be a very sour moment. In the medium term, it is much more a trading market than an investment market. Expectations for earnings growth are too optimistic. Professional investors are fully invested because they have no choice. Individuals have come back to the market, but not like in previous cycles. There just isn't much firepower left to push stocks higher, and there have been some important changes in fundamentals.