'The corporate patient is at least sitting up, managing a smile or two and taking light fluids'
MONTHLY MARKET REPORT
By Jamie Robertson
Business presenter, BBC World News
By the end of the month the UK stock market had risen in 14 out of 15 sessions, Japan's Nikkei 13, the US 12.
US Treasuries, which typically fall in the face of growth prospects, have been on their longest losing streak since 1996.
The company earning season has rebuffed the pessimists and while not flat on its back, the corporate patient is at least sitting up, managing a smile or two and taking light fluids.
But it is in the nature of markets to correct and consolidate, sometimes violently, sometimes gently.
So, when will all this market exuberance come to an end?
'Beginning of the end'
There seems little doubt that we are at the bottom of this recession.
US President Barack Obama's comments that we are at the beginning of the end of the recession means just that.
One contemptuously called it 'an office boy's rally' - small-time investors getting carried away while the Big Boys are on holiday
The problem is that we may be mistaking the bottom for a recovery. Just because the economy is no longer falling off a cliff does not mean that we are leaping, climbing or even crawling back up it.
Unemployment is still worsening. Consumer spending in the US is still shrinking. GDP, as seen in the US on Friday, is still contracting. And not just there but in all the major developed economies.
Bank lending has ossified, despite the best efforts of central bankers. The oil price, far from shooting up in expectation of renewed demand, is languishing at about $60 a barrel, weighed down by excessive inventories.
So why have we had such a spurt of life from the equity market?
The FTSE 100 was considered to have hit a ceiling at 4,500 to 4,600 points, but it seems very close now to breaking through that.
Hyundai made the most of government incentives to build record profits
Many chartists believe that, once safely through, the markets are capable of another sizeable leg upwards.
But the volumes have been slim. One newspaper columnist contemptuously called it "an office boy's rally", small-time investors getting carried away while the Big Boys are away on holiday.
For 13 of the last 22 sessions volume in London has been below a billion shares traded.
Others are looking nervously at September and October, the traditional months for stock markets to give their bulls a hefty dose of reality.
But let's not forget the fact that many companies have surprised investors with the strength of their earnings.
Winners and losers
First let us consider the banks, which appear to be rapidly polarising into two camps - winners and losers.
The consumer hasn't disappeared altogether, but he and she are being awfully canny with their cash
Goldman Sachs and JP Morgan Chase lead the winners.
This month Goldman saw its investment banking business booming: its fixed-income, currency and commodities unit didn't just make an improved profit - it made its best profits ever.
Equity underwriting business generated record net revenue. If you want to raise money on the markets - and a lot of capital-strapped companies do these days - who're you going to call?
More likely you'll call one of the winners. So, Goldman's shares have nearly doubled since the beginning of the year.
Bank of America's have actually fallen in the same period. It's in the loser camp, if you're wondering.
Heartening stories of bankers making shed loads of money do not reflect what's going on in the "real economy".
Almost without exception banks' said bad loans were on the increase.
Firms like Caterpillar are hoping to benefit from US government spending
If the recovery doesn't start to motor, those bad loans are only going to get worse.
But there is some evidence that the "real economy" is turning the corner.
Much of it is down to restocking of inventories.
Last year, companies savagely cut back on stocks, and only recently have they started to refill the shelves.
Others have been boxing clever. Hyundai has made the most of tax cuts and incentives in its domestic markets, and in the US has offered new buyers low fuel prices for new Hyundai vehicles at $1.49 a gallon for a year.
Hyundai pays for any balance between $1.49 and market prices. Hyundai profits hit record levels.
Apple profits also soared: it sold more than 5.2 million iPhones in the quarter, more than seven times what it sold in the 2008 quarter, much of the interest generated by the new iPhone.
Meanwhile Microsoft saw sales fall for the first time in over 30 years.
The consumer hasn't disappeared altogether, but he and she are being awfully canny with their cash.
With the oil price dawdling at about $60 not many investors are buying oil company shares.
BP is down 10% since the start of the year, Exxon 12%. But they are buying mining companies.
In London Vedanta, Kazakhmys, Eurasian Natural and Antofagasta are the best performers in July, all up around 30%.
The copper price is still rising, and China's infrastructure spending is accelerating at breakneck speed thanks to its stimulus package.
Meanwhile the US's own stimulus package has barely begun to hit the economy.
The prospect of making over all those bridges and schools is what's behind Caterpillar's 31% rise in the US in July.
To answer the question then, the equity rally is coming from some careful consumer spending, restocking and government spending.
That's probably enough to stop the rally collapsing, but it's not yet enough to create a real recovery.