We're entering a new "New Era" where high unemployment, corporate cost cutting lead to earnings growth and V-shaped recovery

It is hard for me to believe what I am reading and hearing on the financial markets and BubbleTV:

Merrill Lynch analyst predicting 10% growth in 2009:

Investors should brace themselves for explosive economic growth in the coming quarters as trade with the United States rebounds, Merrill Lynch said Tuesday.

Economist Sheryl King said the latest Bank of Canada report suggests the economy could bounce back with several quarters of 10 per cent growth in the next year. Her report is titled: “Are markets ready for 10 per cent GDP?” The answer to her question is a solid “no.”

Federal Reserve predicting growth with raising unemployment in 2009 (June FOMC Minutes):

The staff projected that real GDP would decline at a substantially slower rate in the second quarter than it had in the first quarter and then [GDP would] increase in the second half of 2009, though less rapidly than potential output. The staff also revised up its projection for the increase in real GDP in 2010, to a pace above the growth rate of potential GDP. As a consequence, the staff projected that the unemployment rate would rise further in 2009 but would edge down in 2010.

After IBM announced that it's revenue was falling but that profits were raising on cost cutting, all the analysts in the place got ecstatic and started to predict that all the US corporations will stop bleeding money but make profits thanks to cost controls. Well, obviously this is ridiculous. If all the companies where to cut spending, you would see the following impacts:

1. Cutting spending hurts badly B2B companies
2. Cutting staff hurts badly B2C companies

So the idea that cost control can lead to the whole stock market to rebound is plain stupid.

IBM revenue falls, but profits raise:

IBM Corp. shares climbed more than 4% Friday as investors and analysts were upbeat about the technology bellwether after it reported strong second-quarter earnings and raised its earnings outlook for the rest of the year. [...]

IBM's revenue fell to $23.3 billion from $26.8 billion. However, even though sales dropped by 13%, the technology giant said it was confident enough in its earnings to raise its full-year profit forecast by 50 cents a share.

Meanwhile, the official PER of the S&P 500 at the end of June was 134 and even with inflated and manufactured earnings of the financial industry, it is unlikely to be lower than 50 in July.

[update] Also, so many companies are reporting earnings less bad than expected but it seems like exceptional items boosting punctually the quarterly report. It seems like no analyst is interested in finding out what those exceptional items are.

[update 29/07/2009] MacroMan writes: Misrepresentation in corporate earnings statements is rife; according to S&P, of the 197 SPX companies to report this quarter, only a quarter have actually earned the number reported in the headlines. Fully 63.5% stuffed "one-off" or "extraordinary" items in their income statements, while only 24 of the 197 had reported earnings that were higher than headline operating earnings. Interestingly, some of the latter were quite sizeable, courtesy of some of the worst performers of the whole crisis: Z-list financials, Ford, etc. The dispersion graph is shown below