from wsj:
...Despite Monday's feverish rally, many Wall Street veterans remain on the lookout for a grinding period of weakness in the global economy and stocks in the months ahead.
"The danger here is that people will be lulled into the idea that a strong bull trend is now in place rather than the idea that the market is just bouncing off a short-term oversold condition," said Michael Darda, chief economist at MKM Partners, a trading and research firm in Greenwich, Con.
In a note to clients Monday, Mr. Darda cautioned that spreads between high-yield corporate debt and Treasury bonds suggest that the U.S. economy is due to remain weak for the next two years or so, with the unemployment rate likely to peak around 8%, compared to the latest reading of 6.1% for September.
"In many respects, I'm not sure if our economy has prepared itself for 8% unemployment," said Mr. Darda. "You have a lot of households that have a lot of debt both from mortgages and credit cards. They have to de-lever [or reduce debt levels] just as we've been seeing corporations doing" by selling assets to raise cash...
...Despite Monday's feverish rally, many Wall Street veterans remain on the lookout for a grinding period of weakness in the global economy and stocks in the months ahead.
"The danger here is that people will be lulled into the idea that a strong bull trend is now in place rather than the idea that the market is just bouncing off a short-term oversold condition," said Michael Darda, chief economist at MKM Partners, a trading and research firm in Greenwich, Con.
In a note to clients Monday, Mr. Darda cautioned that spreads between high-yield corporate debt and Treasury bonds suggest that the U.S. economy is due to remain weak for the next two years or so, with the unemployment rate likely to peak around 8%, compared to the latest reading of 6.1% for September.
"In many respects, I'm not sure if our economy has prepared itself for 8% unemployment," said Mr. Darda. "You have a lot of households that have a lot of debt both from mortgages and credit cards. They have to de-lever [or reduce debt levels] just as we've been seeing corporations doing" by selling assets to raise cash...
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