Thanksgiving is my favorite holiday of the year as it is full of family, football, and a riduculous amount of turkey. On this day that everybody gives thanks, I thought it would be a good idea to talk about what both the bulls and bears have to be thankful for. Let’s start with the bulls.
Bulls
1. The Fed- Ben Bernanke is the gift that keeps on giving for the bulls. He has explicitly said that he wants to juice the stock market higher, which would in theory create a positive wealth effect and enable the consumer to start spending again due to increased wealth. I don’t have enough room here to fully rebut this point of view, but needless to say the opposition to it is staggering. However, there is no question that the river of liquidity going into the system is a positive for stocks, at least in the short-run.
2. Jobs- Unemployment is still annoyingly high, but there is no doubt that it is improving. Jobless claims fell to 407,000 this week, which is the best number in a long time. Once the number stays below 400,000, the bulls will really have something to celebrate. The unemployment rate can finally come down consistently at those levels.
3. Earnings- Corporate earnings are soaring as cost-cutting and overstretching existing employees have helped the bottom line in corporate America. The third quarter was a great one on the earnings front and is one of the main reasons that stocks are once again pressing up against their highs. In the short-run, earnings will take a back seat until the fourth-quarter reporting season begins.
Bears
1. The Fed- Why should the bears be thankful for the Fed? In the long run, many economists believe that QEII will end badly. Inflation and further asset bubbles are the fear that economists have about the Fed’s plan. Inflation probably won’t happen immediately, but I think that asset bubbles could be another concern. How many bubbles have we had lately? Some people never learn.
2. Bullish Sentiment- The bulls are back to enjoying bountiful profits that just seem a little too easy to come by. The market has an uncanny ability to make the majority look foolish and the bears (whoever is left) are counting on this to happen. For now, seasonality is with the bulls, but things never unfold how everybody imagines them to.
3. Banking Woes- The banks in this country and certainly in Europe are not in good shape. It is difficult to imagine a meaningful rise in the stock market with this sector in the doldrums, but so far that is exactly what has happened. The bears think that another big shoe is about to drop in the European sovereign debt crisis or foreclosuregate here at home. This is certainly an issue to keep an eye on.
As you can see, the season is providing bounty for both sides. Whichever side you fall on, have a happy and safe Thanksgiving!
Both Bulls and Bears Have Reasons to be Thankful is an article from: 
