FB5000

Why the Dow Is Headed to 6000

No. The market is going up and will continue to do so for a while.

Agree with others. The points and argument are weak.

The policy response has been appropriate. Panic was averted. The economy was boot strapped. The lender of last resort and the admininstration acted correctly - both Bush and Obama - the Congress on the other hand is another story. The market and the economy are responding - this is all as expected. We will see 1000 in the S&P before we see 666 again. Q2 earnings "don't matter" huh? Really? Earnings are on the mend. Financials will lead they have before. Watch.

As for the macro points. Stick to trading - you are no economist.

1. Deleveraging is a good thing. The worst is past. Consumers and others rebuilding balance sheets is a net postive for the economy. Yes consuption will decline but from such a fantastically aberrant high. It had to happen and does not need to get back to those levels for growth to recure. Further it reduces the risk of a bubble reforming and bulids a solid foundations.

2. Unemployment is rising. So what? Talk to me when it hits 20% . If it reaches 10 or 11% that is priced in.

3. Wages are depressed. Good point (for the bull case). Positive for earnings, keeps inflation in check, gives the fed room to move. Think about it.

4. Demographic disaster. I doubt it. First of all the U.S is aging less quickly than all other developed economies and most large emergings. In 30 years U.S demos will be better than most. That means that growth and consumption will continue here. Second. Boomers will work longer and be more productive than their parents. This is especially true in the US. Being 65 y/o in China is very different to being 65 y/o in the US. This doosday claptrap that the author spouts is not connected to facts or trends in work and productivity. Yes. 30 or 50 years ago getting to 65 was the end of the line. Not any more - when I can sit at home and design a product that is manufactured in China (and be paid multiples of what the line worker in China makes) or consult to a company that wants to build an LNG train in Dubai. Think about it.

Here's a freebie - the next time some dude spouts off about the decline of manufacturing in the US. First of all tell him that manufacturing has declined everywhere - it is a planet wide phenom. just as agriculture declined from the 1800's onwards. Next ask him what he would rather do - be the guy operating the machine or the guy designing the machine or arranging the financing to buy the machine. The value added is different.

5. Catch 22. Non issue. Watch bank earnings this year. Bet on it.

6. Government Tapped Out. Government debt obsession rears it head. Debt is not an issue if it is spent on productive investment. Define productive. A fleet of gold plated Mercedes Benz's to ferry around govt. officials = not productive. Improved education for elementary and high school students = very productive. Clean energy = marginal. So long as debt overall on average adds to the productive capacity it enhances future consumption especially in an economy that has secure property rights and steady productivity.

7. US can't export itself out of this problem. It does not have to.

That's all.