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This has been a big day in finance, with bankers raking in
$140 billion in compensation and the Dow cracking the five-digit mark. Today, the Dow Jones Industrial Average momentarily
surpassed 10,000, a symbolic watershed that rekindles hope in the financial sector's recovery and boosts optimism for further economic
growth. The Dow--which peaked at 14,000 in late 2007, slipped below 10,000 a year ago, and bottomed out
around 6,550 this March--is only one, singularly totemic financial indicator. But, as both a financial and symbolic measurement, it
still carries weight.
-
Not Yet Out of The Woods CNN Money's Chris Isidore explains why we
have a long way to go. "Lately, there has been a growing consensus
among both investors and
economists that the battered U.S. economy hit bottom and turned around
earlier this year, and is now in a recovery," he writes. "But even
economists who agree the economy is in recovery say that
growth will be slow and difficult, with continued job losses, tight
credit and further declines in home prices. And even some who believe
that the current Dow 10,000 level is justified say there's still a significant risk that the economy will take a step backward."
-
Industry Not Optimistic NPR's Kevin Whitelaw suggests
businesses are far from confident, which means employment may not yet
catch up. "It is bound to boost confidence in the short run, but it
won't
extinguish the lingering doubts about how strong that recovery is going
to be," he writes. "There's also the question of how the Fed and other
institutions will
unwind the massive efforts they have undertaken to prop up the nation's
economy, including keeping interest rates hovering near record lows.
[...] More broadly, there is a sense that the economy is in uncharted
waters, which makes businesses, consumers and economists alike leery of
taking risks."
- Same Greed That Drove The Crash Forbes's Stanley Bing thinks
it's bad news. "It shows that no matter what's really going on
underneath our economic
system, investors want to make money and think they can still do so by
buying and selling stocks and sometimes even bonds. Yay for those
cockeyed optimists! They make the world go 'round!" he scoffs. "All
hope for ridiculous future wealth for each of us resides with the
rampant, uncontrolled, irrational exercise of organized greed that
drives the markets. It looks like we're well on the way to total
recovery in more ways than one, ladies and gentlemen."
- What About Jobs and Sales? Joe Gandelman sees
the Dow climb as little more than a symbol overshadowed by more
concrete economic indicators. "The good news is that the Dow has
approached 10,000. The bad news is that retail sales are still lousy,"
writes Gandelman, the editor of the Moderate Voice. "In general it
looks like it will be a s-l-o-w recovery...particularly with jobs loss persisting as a national problem (and notable problem for Democrats heading into 2010)."
- Not a Political Marker Steve Benen cautions
that the Dow is not a gauge of Obama's success. "Of course, using the
markets as some kind of financial approval rating for the
administration is foolish," he writes in his Washington Monthly blog. "The value of Wall Street indexes is hardly the best metric for
measuring the strength of the economy. Dow 10,000 is just a symbolic
milestone."
- Compare to March '09 Low Discover Magazine's Chris Mooney is optimistic. "Wow, it was only a year ago when the whole financial system seemed
on the brink of collapse; today, by contrast, if only briefly (so far),
the Dow topped 10,000, a huge rebound from its March 09 low of 6,547. Do folks think the nightmare is finally coming to an end?"
- Compare to 1999 High Peter Boockvar
of the Big Picture asks us to "reminisce about 1999, the year it first
passed that magic level." He recalls, "Karl Malone, Pudge, Chipper
Jones, Jagr and Kurt Warner won MVP awards
and the average price of a gallon of gasoline at the pump was about
$1.20. US nominal GDP ended at $9.6b vs $14.1 as of Q2 '09. Also, on
March 29th 1999, the DXY was at 100.36 (now 75.60), the CRB was at
192.40 (now 269.15), gold was at $280 (now $1,060), oil was $16.44 (now
$74.80), corn was $2.32 (now $3.85), copper was $.62 (now $2.83), the
10 yr yield was 5.19% (now 3.38%), and the fed funds rate was at 4.75%
(now 0-.25%). Oh, how time flies."
