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The drumbeat is picking up. Production decline is slowing down as we see a small rebound in rail traffic and an end to inventory builds. There is a nice housing starts number this morning, the strongest jump since 1990, which was forecasted by a small bump in the stocks of
. Huge increase in multifamily units.
Retail sales were up more than expected in February, hence the upgrades in
. Unemployment claims are not getting worse.
Commodities are rising: Witness the run in copper, manifested by
, and the run in oil, signaled by the bottoms in
. Bank profits are on the upswing, which is why
Bank of America
Therefore, the bottom is in. The economy bottomed last month and we are now going to go up. The rally is the logical extension of the bottom and the bottom will become obvious to all shortly. The stimulus is kicking in, lending is picking up, mergers and acquisitions are back and the TALF plan is upon us.
Is it right? Is it all over?
Here's my take: When you see these kinds of stories and data, you can take "Great Depression II" off the table. It first appeared after
, but it has been taken off by this data and will stay off if President Obama doesn't press his budget or if Congress tones it down.
But does taking Great Depression II off the table mean that the rally is "real"? That the
can go to 8,000 or -- the
Doug Kass view -- that the bottom is in?
I want to believe it. However, we then get
Illinois Tool Works
releases a statement so dreadful that I feel like we are, once again, experiencing an economy that gets worse every day. It is important to note that you can puzzle over Nucor and say that production is now at 40%. The bottom for all recessions is about that. The Depression was at 25%.
Most of us know that the estimates are
way too high
for almost every company -- from steel to oil to housing to aluminum to travel to infrastructure to insurance to tech (with some exceptions like
). I am a big believer that you don't get a real rally until estimates are so low that they are easily beaten -- that was the great
bottom of 2003. You can get a ton of false bottoms, although I think that we got so close to my disaster case of 5,320 a week ago that we
take that out or even get near it now.
This positive chatter will be with us. When you combine it with the great short-squeeze call out of
on the beleaguered
, then Doug Kass' big call will be right and the rally will be on again -- a clarion call to go higher.
At the time of publication, Cramer was long Freeport McMoRan, Chevron, Wells Fargo and General Electric.
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