One of this blog’s mission is to make sure that you miss nothing economically and financially important. Like this from the January 15 edition of the WSJ:
Pope Benedict XVI attributed a medical miracle to the intercession of the late Pope John Paul II on Friday and announced plans to beatify his predecessor during a Vatican ceremony on May 1.
The beatification of John Paul II is a major step forward in his path to sainthood, putting him on track to be declared a saint in record time. In a statement, the Vatican said Pope Benedict formally recognized as genuinely miraculous the recovery of a French nun from Parkinson’s disease after she prayed to John Paul II. The miracle is the first of two miracles that candidates for sainthood require to be proclaimed a saint. (…)
The miracle involves the case of Sister Marie Simon-Pierre Normand, a French nun who was diagnosed with Parkinson’s in 2001, a disease that left her severely debilitated. Shortly after John Paul II’s death, Sister Simon-Pierre began praying to the late pope for help. Her prayers were joined by other members of the Congregation of Little Sisters of Catholic Maternity Wards, an order based in Bourgoin-Jallieu, in south-western France. In June 2005, her doctors found no signs of her illness.
In the statement on Friday, the Vatican said a panel of physicians had reviewed the nun’s case and found her recovery “scientifically inexplicable.” (…)
Americans now have the right to claim their own saint.
For, if you have missed it, this week’s Barron’s, by no other than Alan Abelson, declares:
Yes, indisputably we have a recovery.
Economists, strategists and all investors who missed out on the doubling in US equities since March 2009 should rush to have the recent economic recovery declared a miracle. Indeed, the US economy was nothing but dead at the end of 2008 and most experts with any media exposure saw no way out of its moribund state.
Obama’s “Yes we can!” slogan gave hope to some for a while but the bears made sure that nobody but a few obvious lunatics really believed that a recovery was possible.
It is now pretty obvious that a desperate somebody, somewhere, was secretly praying Ben Bernanke for a miracle.
What else could have saved the US economy? The US government, states and cities, and most Americans with a mortgage, including Fannie and Freddie, are deep underwater with little hope other that through a significant devaluation of the greenback and US banks balance sheets. Even while US equities were springing back to life during 2009, all we heard and read were things like “dead cat bounce” and “suckers’ rally”. In early 2010, the double dip scenario and the coming deflation revived the crowd of doubters.
But the prayers had found their way, not up, but down, right into Jackson Hole, Wyoming, where Ben Bernanke, in late August, gave his now famous QE2 Sermon on the Mount. Brothers and sisters, he seemed to say, I have the cure! I can resuscitate this moribund. I vow to do everything necessary to revive it. Have faith … and (please!) buy equities.
Against all the Roubinis, the Edwards, the Rosenbergs and the Abelsons of this world, Ben had the definitive central banker miracle formula: when nothing else seems to work, when nobody believes, when facing Armaggedon, the only cure, is the “absolute no-hold-back, all-out put”. No timid “Yes, we can” here; only a clear, assertive, definitive, read-my-lip “I shall do it!”
And, voilà! Ben did it, with a snap of the fingers. Is it a stretch to liken this recent episode to that of the paralyzed man in Jerusalem who was asked by Jesus if he wanted to be made well?
Rise, take up your pallet and walk. And at once, the man was healed. (John 5, 1-9)
In a mere 4 months after the Jackson Hole sermon, the S&P 500 Index roared 23%, boosting the wealth of the nation just in time for the merriest Christmas Ben could have hoped for. This helped clear year-end inventories, paving the way for increased production, employment, income and more spending in the new year. Alleluia! The recovery wheel is in motion.
We, and Appaloosa Management’s David Tepper, can recognize a miracle when we see one.
At last, the bears, one by one, have conceded the miracle, initially acknowledging that the double dip scenario would not happen, then, just recently, acquiescing that the US economy is accelerating nicely.
Even David Rosenberg has capitulated and seems to be looking for reasons to get bullish. While nobody should hold his breath, David’s recent “optimism”, in itself, is another Ben miracle, the second miracle that candidates for sainthood require to be proclaimed a saint.
So the case for Saint Ben is clear and unambiguous. Two “scientifically inexplicable” manifestations of universally acknowledged miracles, witnessed by zillions, including numerous ultimately converted über-St-Thomases.
The only difference with John Paul II is that Saint Ben did this in his lifetime, on his own, and with the whole world watching, …and praying.
What good would that do, I hear you think, to have such a living saint among us? Gosh! Seems to me that the sky is the limit here. But just for starters, might I venture to suggest that it might reduce, if not simply eliminate, the need for economists in this world.
Good lord, here’s a third miracle.
The latest data on mutual fund flows showed that retail investors have been net buyers of equity mutual funds lately. That has prompted many bears to proudly proclaim that dumb money is back into stocks. David Rosenberg puts it more politely (as you see, he is not bullish just yet):
Is it a classic sell signal? The answer is unequivocally yes.
It is true that retail investors tend to come in late to the party. The only problem here is that this particular party has been far from a door crasher. Whoever is now showing up will find few people on the dance floor, not even many of the “smart” kind.
Autumn and winter so far have not been kind for bears. They are very hungry these days and they will pounce on whatever food they perceive. Perhaps they should sniff at it a bit longer before gobbling it.
Jason Zweig’s Intelligent Investor column in the WSJ took the time to appreciate the food and found that it is not as meaty as it appears:
But a closer look at the numbers shows that, instead of plunging back into stocks with both feet, the small investor appears to be dipping in only the first knuckle of one pinky toe.
Jason points out an interesting and not insignificant seasonal pattern unsighted by hasty bears:
(…) fund purchases normally take a jump in January. In 2006, according to TrimTabs Investment Research, 72% of all the new money that came into U.S. stock funds arrived in January. In both 2009 and 2010, more than $6.8 billion flowed into U.S. stock funds in January. Still, a total of $109 billion gushed back out during the two years.
The equity revival since March 2009 has not healed the deep wounds of 2008-09, far from it, making it doubtful that retail investors are about to enter the stock market en masse. History will likely be repeated as Zweig’s column recalls:
In early 1948—nearly two decades after the Crash of 1929—the Federal Reserve surveyed 3,500 investors nationwide about their attitudes toward stocks. Only 5% were willing to invest in equities, and 62% were opposed. Asked why, 26% said stocks were “not safe” or “a gamble.” Just 4% felt that stocks offered a “satisfactory” return.
Older investors, near or in retirement, are more likely to play it safe while the younger crowd is probably more focused in getting back onside with their credit card and mortgage debt. This chart from NBF Financial Group illustrates that the equity party remains largely unattended.
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