The problem with share rallies is that the background fundamentals are so bad that recoveries are doomed to run into the sand.

I am sitting next to a Bloomberg screen pumping out a relentless stream of grim news on the world economy.

Some examples from 6 November were “California to run out of cash by February, says Schwarzenegger”, “Toyota Motor led declines among automakers after posting a 69 per cent plunge in quarterly net income and projecting its biggest annual earnings drop in at least 18 years” and “ArcelorMittal, the world’s biggest steelmaker, said the market for the metal has changed ‘dramatically’ [for the worse] since the company reported second-quarter earnings in July”.

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