NEW YORK ( -- The recent equity market rally had a strong driver behind it: Investors' optimism, which has helped the financial market sustain one of the longest trends of the last few years.

In trade on Monday, equity markets are heading higher for the eleventh consecutive day, the longest streak of the last few years, and a similar pattern to the period when the housing and credit bubbles were being inflated. In particular, the Nikkei closed in the green for the ninth consecutive day, making the current rally the longest in a little more than 20 years.

However, the present rally seems to defy the macroeconomic picture, some are saying. The global economy is still in a contraction phase, even though the pace of decline had a noticeable slowdown, the unemployment rate is projected to surge to around 11%, although just a few months back the estimates were pointing out to a 9% rate.

Add to that the fact that the consumer spending sector appears to be deep in contraction, as credit card defaults head towards record highs in U.S. and European markets. Moreover, the major central banks together with the IMF forecast a slow recovery period, which would have a strong weight on both consumer and business revenue streams and expenditure.

Despite these issues, investors have been lured by the number of companies that had better than expected reports in the Q2 earnings releases. Out of the nearly 200 major companies that reported so far, a huge majority beat analysts' estimation, probably making Q2 appear as one of the best earnings quarters in history. Things are not so rosy after all, it would seem, since the reported earnings so far are lower by 30% than the numbers seen in the second quarter of 2008.

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