It's a Healthy, Bouncy Rally!!!

It's the story of this earnings season- the ability for the broad market not to extrapolate bad news from an individual company and extended it to the entire market. Some big names have already missed but most have barely even taken down their sectors let alone the broader market. Sure, weightings on individual stocks influence overall trading session but the psychological angle underscores one thing we all knew even if some are loath to admit it- It's a Rally!

Sure, McDonald's held the Dow from achieving a new all-time high but there wasn't a disastrous reaction beyond Mickey D's own share price. On the contrary it seems investors are more mature about news and willing to sift through company-specific issues and pick up on gripes about the weather and other management attempts to mitigate short-comings.

Of course there is some correlation to big names that have missed and the US economy but laws of business including basic principles of creative destruction are at work as well. Consider McDonalds (MCD) gets hammered but Chipotle Mexican Grill (CMG) surges or Microsoft (MSFT) takes a hit but IBM rebounds. I think this is hugely positive development.

That said I'm under no illusions stocks are now benefiting from the long-awaited rotation out of bonds. It helps to be the only game in town but execution is still the ultimate determinate for winners and losers. Thus far we haven't seen any big name company toss the entire economy and stock market under a bus, a typical move when there are unacceptable earnings misses.

Right now the real deal is creative destruction and business execution is all most companies have as there is no big wave of economic prosperity to lift the shares higher. I actually would love a period of pure dart-throwing because of shared prosperity.

 Lies and Damn Lies

"I wish to apologize to ... all of the baseball fans especially those in Milwaukee, the great Brewers organization, and my teammates."-Braun

Ryan Braun was adamant about not using performance enhancing drugs after he won the 2011 MVP and through a mistake in the testing lab he was allowed the benefit of the doubt. So, what does he do...takes performance enhancing drugs again? It's hard to understand why these guys get away with cheating and continue to flaunt the system knowing at some point it will catch them. But, maybe that's the real deal, maybe hundreds have come and gone abusing the system throughout and never discovered.

In economics, however, cheating the system always results in disaster. While it's true some presidents have been able to wreck havoc and leave office before the day of reckoning. That will not be the case this time around as the economy is hanging by a thread. But, a sickly $16.0 trillion economy still provides enough of a backdrop for winners to emerge but no room for losers to pose as winners or ride the wave. Moreover, this is an economy that needs to grow and a nation that needs to not only dream but believe those dreams could come true.

Sadly, there will be no mea culpa on the economy not even one as contrived as the one Ryan Braun Tweeted after getting kicked out of baseball for the rest of the season. (This suspension will be one of the most expensive on record costing the Milwaukee Brewers $3.5 million but never fear as A-Rod is probably going to shatter that with his suspension in the next couple of days.) Instead of an apology, forced or otherwise, I'm bracing for more politics of envy and exclusion in White House speeches scheduled for later in the week.