Boom! Just like that the market leaps forward. At least thus far this morning it has leaped forward. Who knows if it will hold for the day, but, so far, the news of the day has created some excitement.
- China cut interest rates unexpectedly on Friday, stepping up efforts to support the world’s second-biggest economy as it heads towards its slowest expansion in nearly a quarter of a century.
The above news tagged right along with commentary about Mr. Draghi considering QE for the European economy, which means, of course, the inference for the US is that Ms. Yellen and her crew will not want to raise interest rates when Mr. Draghi is considering his own program to stimulate the European economy.
The above news also joined ranks with recently released economic data to help the market leap out of the gate this morning.
- Intel, helped by a stabilizing personal computer market, gave a revenue outlook for 2015 that was above Wall Street’s expectations and also raised its dividend, sending its shares higher.
- Consumer sentiment in the U.S. advanced last week to the highest level since January 2008 as Americans grew more optimistic about their financial well-being and the buying climate.
Yet and still, even as the positive economic data flows, there are still those who cannot, or, rather, will not admit that the US economy is on the precipice of breaking out into a formidable growth spurt. Check this out.
- The risk of slower growth is not priced into the market. If US economic data continues to disappoint, and we get a growth hiccup in the fourth quarter, then we’re likely to see some US market weakness.
Seriously? Did an analyst write the words, “If US economic data continues to disappoint?” Which planet does that analyst live on? Is he or she just burying his or her head and hoping for the worst? Me thinks not. Me thinks the analyst actually believes that recent US economic data is disappointing.
True, if we do get a “hiccup in the fourth quarter,” the market will reflect that, but, given what has been happening in the third quarter, is it likely the fundamentals will shift to the point where the market freaks out?
My guess is we will see the opposite if the fundamentals remain stable or improve, and the latter is the more likely case.
- Wall Street is already indicating that the next “story” to be embraced is a domestic-consumption resurgence. Brisk increases in payrolls, low personal debt-service costs, crashing petroleum prices, an uptick in housing activity and a stronger dollar making imported goods more affordable are all lining up behind this tale.
Tale? Well, maybe it is a narrative the media is shaping, but at least it is a narrative based on facts, not exaggerated fear. The US economy is improving for all of the above mentioned reasons, and more, and when you add the economic stimulus from China and the coming economic stimulus from Europe, well, the future looks bright indeed for the fourth quarter and beyond, say, right up to June of 2015.
True, along the way, we will have some bumps, which is why the following thought is worth consideration.
- We’ve had seven declines of close to 5% or more in the S&P 500 (SPY) ETF since late 2012. In each case, the decline was fully recovered in less than two months. In most cases, the decline was recovered inside of one month. This is an amazing fact, yet many people have been focused on trying to pick a top rather than preparing to buy the dip.
Yes, BTFD (buy the freakin dip) is a worthy strategy because, unless the world falls apart, the US economy will lead the global economy on a path of recovery in 2015. It will happen and those that think otherwise are not seeing the reality of what is happening in the world – an historic, positive, economic transition is coming into full swing.
Hopefully, part of that transition will be a heightened moral and ethical sensibility. I am not counting on it because when you put lots of money in front of people they can do evil things. What I am counting on, though, is that the powers that be to regulate greed keep slicing away from the greedy their ability to inflict harm on themselves and others in the markets.
- Goldman Sachs Group on Thursday took the lead in rejecting allegations by a U.S. Senate subcommittee that Wall Street banks were exploiting physical commodity markets to manipulate prices and gain unfair trading advantages.
Go get ‘em boys and girls!
Trade in the day; invest in your life …
