I'll not make a prediction if this latest rally in stocks is sustainable or not. I don't know. But it is self-fulfilling. Rising stock prices improve consumer confidence, and more importantly send a signal to CEOs and other executives that maybe there is a light at the end of the tunnel, and maybe that light is not another oncoming train.

CEOs, who despite the appearances, are as human as everyone else, may decide to postpone or at least reduce the speed of job cuts as they start taking cues from the stock market.

Thus this stock market rally (if not followed by a sharp decline) may actually help the economy, at least in the short run.

Nigel Davies replies:

Interesting take on things. Optimism is usually associated with the likelihood of a fall, the logic being that 'everyone has already bought'. But maybe there's a difference between new optimism and old optimism.


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