Still confused about the current face ripper in the equity markets? Apparently the news isn’t entirely out because if it was the buyers strike would have begun already. The following is a pretty good summary of the recent rally and the 10 things that are driving it (via Zero Hedge):
1) U.S. financial stocks have bounced back nicely from year-end tax loss selling, making it look (for the moment, at least) like investor confidence has returned to this beleaguered sector.
2) After a flush of excess enthusiasm for Q4 2011 earnings in the middle of last year, analysts have reduced their expectations enough for companies to meet them as we go through earnings season.
3) A lack of deadly European headlines, such as a failed auction or +8% Italian bond rates.
4) No hard landing headlines from China.
5) A Euro that seems to be standing on all four feet, even if genus and species of the animal are as yet undetermined.
6) Reasonable valuations for U.S. stocks, at least against the much-mentioned $100/share for S&P 500 earnings. And frankly even if they are $80/share.
7) A gaggle of decent news from the U.S. labour markets and consumer confidence.
8) Oil prices that have not materially lifted above $100 despite a hot civil war in Syria and a ruthless cold war, replete with unabashed assassinations, between U.S./Israel and Iran.
9) The expectations for inbound money flows into U.S. equity mutual funds in January from new tax year 401(k) contributions.
10) A rally that actually started in early October, did a pretty textbook reverse head-and-shoulders in November and December, and broke out about a week ago.