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Good Apples not Green Shoots

August 12, 2009 – 9:21 am

This morning import/export numbers were another sign that the economy is improving. Imports were up meaning demand in the U.S. for foreign goods has picked up although from a very depressed level. When you combine import and export data the conclusion can only be that economies everywhere are picking up because our exports also increased.

It does not mean that everything is fine, that we are returning to pre 2007 economic activity. There is plenty to worry about and it would not take much to upset the economic apple cart and dump all our apples on the street.

For the time being the apple cart is filling with some good apples and people are starting to buy them. Still, the bad apples in the form of distressed companies with poor earnings are to be avoided and the cart itself is not rolling all that well.

For the stock market to continue moving higher not only will improved economic activity be necessary but it has to turn into improved earnings for companies that sell those good apples. The most recent quarter showed better than expected numbers but on average those numbers were down over 30% from a year ago. That has to change. I think it will.

Sorry. The apple analogy was a little much.

Good Trading
Steve Peasley

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