More bear failure today. China was down 7%, oil was down over 5% at one point, copper down several percent and we couldn't break through 1015. Like I said yesterday, 1015 was a key level. We hit it and bounced along it several times but could not break it. Has to be viewed as yet another total bear failure. We may break it tomorrow but it is frustrating.
Fundamentals are still irrelevant. When the market caps combined of AIG, Citigroup, Freddie Mac, Fannie Mae, and Bank of America equal over 200 billion you know you are living in another paradigm. What does that $200 billion represent. It represents "value" to shareholders. What is intrinsic value? It is the present value of all the cash flow a company produces, returned to its owners. The idea that the present value (or any value for that matter) of those five companies will be anything other than a very small fraction of $200 billion is ridiculous.
What will break this market? I can explain the fundamentals until I am blue in the face, that a 130x PE multiple and 22X multiple on operating earnings is absurd, that the credit problems are not behind us, but until the market breaks it won't matter. Incredible.
New month tomorrow and we may break but at least for today, bulls win again.