Investors 'don't stop believin' that a recovery is coming
Forget Warren Buffett and Nouriel Roubini, Wall Street is taking its cues from noted market strategist Steve Perry.
The former lead singer of Journey is known for, among other things, the seminal 1981 power ballad "Don't Stop Believin" -- the perfect symbol of the giddy optimism rearing its head again today. Any child of the 80s -- myself included -- heard the song at countless school dances.
Nostalgia for the era of parachute pants and MC Hammer runs deep. Although the tune is 28 years old, it still resonates today, having sold a whopping 2 million downloads, the first song from the pre-iTunes era to do so. Given the stock market's recent performance, "Don't Stop Believin' will make its way onto the iPods of many an investor.
U.S. stock markets are poised to rise Monday on -- what else? -- more positive comments from Federal Reserve Chairman Ben Bernanke. On Friday, the central banker sent stocks soaring after he was quoted as saying the economy is near a recovery. Existing home sales also posted their biggest gains in more than two years, further indication that the housing market is improving. Markets in Europe and Asia also rose.
Throwing cold water on the rally is "Dr. Doom." Writing in theFinancial Times today, Nouriel Roubini said the chance of a double-dip recession is increasing because of risks related to ending global monetary and fiscal stimulus, Bloomberg News noted.
"Governments around the world have pledged about $2 trillion in stimulus measures amid the worst worldwide recession since the Great Depression," the news service said. "Federal Reserve Chairman Ben S. Bernanke and other global policy makers have cautioned that the recovery is likely to be muted, indicating they would not soon remove all the stimulus injected into the financial system."
Maybe Roubini is right. Maybe he is starting to believe in his "Dr. Doom" image too much. It's tough to say. Ebullient optimism in 80s power ballads and stock markets never lasts.