Is the bear market really over?

During the second quarter of 2003 global equity markets yielded significantly higher returns. The perception of a more stable geopolitical environment, including the end of the US-Iraq war, decreased threat of SARS, as well as an anticipated economic stimulus program in the US have all contributed to increased confidence amongst global equity investors. The positive results in Q1 of 2003 in terms of earnings growth were attributed more to re-stocking and cost-cutting as opposed to final demand. Despite the recent rally of the equity market, overall economic growth, sustained profitability, and high corporate debt levels are problems that still need to be addressed. Bear market equity rallies are often unpredictable and unsustainable, and optimism must be tempered until the global bear market runs its course.