This Economy Wants to Recover

In his recent Croesus Chronicles for Forbes, Robert Lenzner outlined several economic points:

"The bear market ended March 9, and the end of the worst recession since the 1930s, or is it the mid 1970s, is plainly in sight."

"About $120 billion has been pulled out of global market funds since mid-March;"

'Yet money market assets are still equal to 50% of the S&P 500 market cap...Since 1990, money market assets have averaged about 20% of the S&P 500 market cap. This is a huge potential buying power.

While no one is certain that a new bull market has begun, we can point to some telling signs: "Stocks broke higher on June 1 even though the yield on 30-yeard Treasuries climbed back above 4.5%...This is what the long bond yielded in August of 2008. Just before the meltdown in credit markets during the fall of 2008."

"Credit markets are healing, as spreads have fallen considerably."

"Corporations are able to raise tens of billions in the short-term debt market."

"The yield curve, the difference in yield between short-term and long-term securities, usually widens in advance of an economic recovery, and it has done so."

"Stocks also rose spectacularly despite the bankruptcy of General Motors and the continuing loss of jobs in the automobile industry. Bad news doesn't seem to be rocking the market like it did a few months ago."

"Earnings yields on equities still remain comfortably above the yield on 10-year Treasuries and should have the ability to absorb higher interest rates driven by economic recovery."

'The US manufacturing institute for Supply Management index rose to 42.8 in May, which usually signals that gross domestic is expanding rather the faltering."

'Housing, the genesis of the crisis, is showing signs of stabilization and even amelioration. Pending sales were up 6.7% in April, even if prices are still in the tank.'

'Even automobile sales improved in May to an annualized 10 million vehicle level.'

'There has also been a mini-bull market going on in commodities that has been mightier than the one for stocks. This outperformance by commodities is another leading indicator of an economy about to turn the corner.'

And lastly, "Another factor that helps the Dow is the replacement of two stocks with no earning--General Motors and Citigroup--with Travelers and Cisco."

"Looks to Croesus that this market wants to rise, deflation or inflation both be damned!"