TUESDAY FEBRUARY 2, 2010

Are stocks back?

The stock market feels a whole lot better in the last few days.  And it should.  Last Friday, GDP for the 4th quarter was up 5.7%.  Yesterday, the ISM Manufacturing index was up strongly, at 58.  Today, the pending sales of homes number was surpirsingly strong, suggesting the housing is stabilizing.  And finally, the corporate earnings season continues to go well.  Importantly, many companies are beginning to show a recovery in revenues as well as earnings.  Over the last year, earnings have been strong but have been driven by cost cutting.  After cutting costs for over a year, earnings have the potential to jump with even modest revenue growth.  The appearance of revenue growth in 4th quarter earnings is very encouraging.

It could be that the slow but methodically improvement in the economy is beginning to overwhelm the uncertainty coming out of Washington.  President Obama's budget appears to be dead on arrival in D.C.   The death (?) of healthcare, the diminishing prospect of Cap and Trade, and the political unwillingness to raise taxes might be encouraging the bulls to return to the market.

POSTED AT 1899-12-30 19:09:00.0

KEN ENTENMANN, CFA
SENIOR VICE PRESIDENT AND
THE DIRECTOR OF INVESTMENT MANAGEMENT SERVICES

Ken is a Senior Vice President and the Director of the Trust and Investment Services at Alliance Bank, N.A. He has 23 years of investment experience and oversees the management of assets totaling $1 billion. He holds a B.S. in Applied Economics and Business Management from Cornell University and an M.B.A. from the William E. Simon Graduate School of Business Administration at the University of Rochester. He has also earned his Chartered Financial Analyst designation. He is a member of the Executive Committee of the Trust Division of the New York Banker's Association. He is also a director of the Central New York Community Foundation.

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