Margaret Jones, my beloved business partner, is calling this "the bulimic stock market": "It gets hungry, it binges. Then it's overwhelmed by guilt and fear of the Fed, and it purges. It goes up, it goes down. It goes up, it goes down." In 1998 and 1999, the vast bulk of the market was in the doldrums even as indexes hit higher and higher levels. Eventually the broad market wanted to go up, but the Fed repeatedly voiced concerns about the stock market and the wealth effect. The internet bubble, not surprisingly, burst, and then the Fed got its wish and the indexes headed south. Now the market is terrified that a rally could prompt another Fed rate increase that would do more than dampen growth.

What, me worry? Corporate earnings reports have been boffo. Productivity was up 5.1% in the last 12 months while unit labor costs actually dropped. The PPI was zero last month. But the stock market keeps wringing its hands, worried that these productivity increases can't be sustained, that the economy can't keep growing without inflation heating up, etc. Analysts are groaning that the big techs can't keep growing revenues and earnings at high rates, can't keep margins up, etc. All news is bad news, so solid performers like Cisco are going nowhere, slight disappointers like Nokia and Dell get slaughtered, and AOL and Cisneros Group had to prop up AOL Latin America's IPO of 10% of its stock by buying 1/3 of it themselves, even after cutting the offering price in half. Isn't anyone looking at the numbers?