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Hard to ignore the gains in the stock market on Wednesday.The S&P 500 touched its highest level since early May and the Dow surged higher by triple digits before paring gains.Considering the market heard from Fed Chairman Ben Bernanke earlier in the week, the gains can’t be in anticipation of QE3 – that’s got to be priced in by now.
What’s going on?Top hedge fund manager Anthony Scaramucci thinks the advance in the market is a sign of growing optimism.After talking with his peers he’s hearing that earnings have generated a lot of bullish sentiment. “The economy is only growing at 1.3% but the earnings numbers are coming through relatively well. Considering the environment– this is magnificent.”Scaramucci, managing parting of SkyBridge Capital, says that path of least resistance is probably higher. “If we get some positives and some growth – I think we’re looking at a coiled spring.”Trader Brian Kelly, founder of Shelter Harbor Capital, is on the other side. He concedes that earnings are better than expected but he argues that doesn’t make them good. “Companies are hitting expectations by cutting costs not from growth.” As a result Kelly believes the current gains are a short-covering rally, nothing more. “I certainly don’t think investors are getting more optimistic.”What do you think? We want to know!
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