Scepticism about the permanence of recent market gains abounds.Strategist Komal Sri Kumar of TCW doesn't believe the fundamentals are there.Banks are not lending,and unemployment is high.There is still quite a bit of downside coming.This is not a market for the common person to buy and hold,in Mr.Kumar's view.
The fact that the earnings are coming from financials is negative for the overall economy.They are from proprietary trading,not commercial lending.The flow of funds data show that loans are being written off;borrowers are not paying them,Mr.Kumar observed.
Indeed,a lot of the market's upswing is attributable to the performance of only one financial stock-namely,Citigroup.Citi will report its earnings next month,a moment of vulnerablity for equities based on what we have seen so far.
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