Fallout: The Financial Crisis

Market’s rally ends ‘dark pessimism’

Jeremy Hobson Jul 23, 2009
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Fallout: The Financial Crisis

Market’s rally ends ‘dark pessimism’

Jeremy Hobson Jul 23, 2009
HTML EMBED:
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TEXT OF STORY

Kai Ryssdal: We normally wait until a little later in the program to tell you this, but this was a mighty fine day on Wall Street. There were better-than-expected profits at some key companies. Better-than-expected home sales figures, too. Marketplace’s Jeremy Hobson has more from our better-than-expected desk in New York.


JEREMY HOBSON: It may be raining on Wall Street tonight, but Mark Zandi, chief economist at Moody’s Economy.com, says…

MARK ZANDI: The sun is definitely rising. I mean I don’t think it’s going to go to high noon any time soon, but this dark pessimism that has pervaded this economy for so long is now lifting.

Could you be a bit more specific, Mark?

ZANDI: The Great Recession, the worst downturn since the 1930s Depression, is coming to an end.

OK, that’s one man’s opinion. What about Peter Morici, the University of Maryland economist who tracks economic indicators like tweeters track their friends on Twitter?

PETER MORICI: It’s the beginning of the recovery, analysts are uncovering prospects for profits across the board.

And perhaps companies are realizing they laid off too many people. That’s the view of Liz Ann Sonders, chief investment strategist at Charles Schwab.

She says the rising stock market is feeding on itself, sending investors into the second stage of fear.

ANN SONDERS: We know the first stage of fear, which is get me out, things are horrible. The second stage is as the market kind of takes off on the upside, people are then fearful of missing out.

But she does point out that when you hear housing starts, or any other economic indicator are better than a year ago, it soon won’t mean much.
Because, a year ago, we were just a month away from the collapse of Lehman Brothers and everything that followed.

SONDERS: We’re entering into the part of the cycle now where year-over-year comparisons are going to get easier and easier.

It’s nice to be able to look back on the dark times, isn’t it?

In New York, I’m Jeremy Hobson for Marketplace.

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