Good News Lifts Stocks
Stocks hit the jackpot today, with the Dow up almost 250 points.
There was better economic news from ADP private jobs and ISM manufacturing. Revised productivity came in stronger with falling unit labor costs that point to strong profits. Europe’s debt problem looks a little easier on hopes the ECB will be buying bonds. (Maybe QE2 for Europe.) There were rumors that the U.S. would contribute more money to a bigger IMF/Euro bailout fund, although the Treasury denies any commitment. China’s manufacturing survey came in stronger. And hopes are growing for an across-the-board extension of the Bush tax rates.
So all of this added up to a big stock rally.
And one final thought: The improving U.S. economy again suggests to Ben Bernanke that he should back off QE2. A tax-rate freeze is a much better idea for growth.
However, if Europe pumps in more money -- as I increasingly think it should -- we could be headed for a global mini-boom. Surprise, surprise.
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