As seen in the Fortune story of June 15 titled “Economy in ‘early stages of repair'”:
“The stock market’s rally serves as “broad validation” of the Obama administration’s financial rescue efforts, Treasury Secretary Tim Geithner said Monday.”
While ostensibly this is correct, and commonly-held theory states that a stock market rally would precede an economic recovery, is this stock market rally a “validation” as stated? Or is a guarantee of any type?
In my opinion, one has to be careful about “reading too much” into stock market rallies, as they can prove to be ephemeral. One should also take into account a broad range of economic and financial “fundamentals” as well.
If this stock market rally proves to be a “bear market rally” (as I have previously stated on the June 8 post), it will fall below the previous S&P500 low of ~666. Would such price action “validate” the “financial rescue” efforts?