Stocks have come a long way in a hurry. Since the Bear Stearns disaster in March, the S&P 500 and Eurofirst 300 have both gained about 12 per cent, while the S&P came within 2 per cent of regaining its level from the start of the year. A rally this long cannot merely be attributed to relief that financial Armageddon, apparently a real risk two months ago, has been avoided.

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John Authers on 12 per cent gains in both S&P 500 and Eurofirst 300

Instead, it is down to two main factors: a rethinking on the economy, and a remarkably optimistic reading on the prospects for corporate earnings.