Giving Credit to the Growth Engine

Far too many investors ignore the role that improving credit markets have played in the recent rallies in stock and commodities markets.

The financial media has spent considerable time discussing the 50 percent rally in the S&P 500 since the March lows and the doubling in oil prices since late last year. What commentators rarely mention is that crude and the S&P 500 have returned to levels last seen in October and early November 2008. Both oil and the S&P 500 would need to rally another 20 percent to the levels that prevailed before Lehman Brothers’ implosion and the height of the credit crunch. Viewed in that light, these moves don’t look quite as impressive.

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