The stock market continues to exhibit amazing resolve climbing off the canvas for the second consecutive session. Despite early ninety point plus declines, the stock market rallied into the plus column by the close. Actually, the Dow Jones Industrial Average has been the battle ground for bulls and bears as the other major indices have been robust from the opening to the closing bell. The big names have their issues, but most have earned the benefit of the doubt from investors. So, when the CEO of Caterpillar says things are getting better and he feels confident, nobody cares about the huge miss and subsequent lower guidance.
In a sense this is what investing is all about - the benefit of the doubt.
Of course the basis for such benefit has to be trust and there still isn't a lot of trust. It is right not to trust Wall Street, but the question is should we trust corporations? I think this is more complicated than trusting the folks in the lower canyons of Manhattan, but the answer is yes-trust publicly traded companies to try to earn money for their shareholders. Obviously there are and always will be bad actors, but for the most part you are essentially trusting the nature of survival, competition, and greed.
Businesses want to survive, and the best way to do that is to provide the best products and services, or mediocre stuff at a hell of a discount, but the former is the better way to go and the one that generates the biggest profits. But individual investors aren't buying it ... any of it.
Hussman's Open Letter to the Fed; The Problem with Bubbles; Textbook Pre-Crash Bubble; Reflections on Not Chasing Bubbles; Integrity vs. Respect | Mike Shedlock