Politicians and business leaders are learning the importance of confidence. Obama describes the latest increases in housing starts and durable goods orders as “first shoots of green”. The New CEO of National Australia Bank says the global financial crisis could be bottoming out. Given the speed this crisis hit are we going to see a rapid return to consumerism-fueled prosperity? Or is it a dead cat bounce
A dead cat bounce is a figurative term used by traders in the finance industry to describe a pattern wherein a spectacular decline in the price of a stock is immediately followed by a moderate and temporary rise before resuming its downward movement, with the connotation that the rise was not an indication of improving circumstances in the fundamentals of the stock. It is derived from the notion that “even a dead cat will bounce if it falls from a great height”.
I trust the positive figures and am relieved to see stirrings of life. But I am also a realist and believe the crisis is far from over. The analogy I prefer is rather gruesome. I believe the python has swallowed the sheep, but it’s going to take a long, long time to work through the system.
