What can we tell you about the US stock market that you don’t already know deep in your belly? This is a stimulus rally, pure and simple. It’s one big bet that the government’s funny money will lift up stocks out of mire of the recession… and send them to the moon!

So where are we now in the 19th month of the recession/depression? Perhaps not where we expected we’d be. The Dow finished its best gain for July since 1989. The index was up 8.6%. The S&P 500 also had a good month. It finished up 7.4%. 

While the many of the world’s economies continue to look for signs of growth, the U.S. economy took a big step in the right the direction in the second quarter.

The dollar fell against the yen on Friday after a government report showing a slower-than-expected contraction in the U.S. economy in the second quarter was offset by a decline in consumer spending.

Gold pared gains on Friday as the euro retreated from highs against the dollar in the wake of second-quarter GDP data from the United States.

Does “stimulus” really work? Does quantitative easing work? The historical record suggests not. So what brought us out of the Great Depression? The answer might surprise, even though it shouldn’t…  A grumpy President Obama says that the $787 billion dollar stimulus package “has worked as intended.”

Ten More to Be Charged in Madoff Case; British GDP Suffers Highest Drop in Half a Century; Housing Price Drops Slowing; GM Attempts to Emerge From Bankruptcy; Corn & Soybean Planting Up; AIG Gets Government-Backed Board; Japanese Memory Maker Gets Bailout

All this week, we’ve been sounding the alarm of the so-called economic “green shoots.” These have now been exposed as being pure propaganda designed to lure investors back into stocks and to allow banks to recapitalize through share issuances at artificially elevated prices.

Jobless Claims Surprise; GDP Revised Up; AIG Makes Plans to Pay Back Feds; Palm Losses Mount, But Revenue Beats Street; Micron Loss Not As Much As Expected; Senator: Health Care Bill Could Cost $1 Trillion; GM Keeps 1,200 Jobs in Michigan

One of our favorite underground investors Porter Stansberry of Stansberry & Associates Investment Research has picked up on a chart from the Wall Street Journal that will make your hair stand on end.