It appears yesterday’s market performance matched my thinking yesterday. It seemed bent on going up, even in the face of the Fed members bickering and the resurrection of US political nonsense. Here is what I wrote yesterday.
- I guess the market is blowing off the negative comments from some Fed members and the eulogy for President Obama’s just released budget. I guess the cracks in the ceilings of the Dow and S&P 500 aren’t scaring the market either.
The market moved yesterday also took many pundits by surprise and it sent the perma bears, semi-perma bears, and too-far-too-fast bears scrambling for an explanation. And, that brings me to a quote from one of my favorite financial writers(David Moenning), a straight shooter who thinks likes me, in simple terms.
- But, for those of you who aren’t permabears, please do yourself a favor – wake up and smell the breakout already! Yes, it is true that a correction could start at any time. And, if the situation is right, it might just be a doozie. But, given that the U.S. economy is improving, Europe is stabilizing, and the central banks around the world appear to be hell-bent on stimulating their respective economies, I’m not sure this is the time to be looking for the sky to fall.
Just so you know he and I are not just blowing smoke to cover our rose-colored glasses, I give you more information to help you see that the current market rise is not some pumped up bubble akin to 2000 or 2007. It is real and it will continue as the global economy continues to improve.
- Growth is picking up in most industrialized countries, including in the euro zone, the OECD said on Wednesday, with the United States leading the way. The Paris-based think tank’s composite leading indicator shows growth firming in Japan and picking up in China while the outlook is improving for Italy and France is stabilizing.
The global wildcard in the game above is Europe, for sure, and with stats like the one below, one could jump to a conclusion that the game is lost, at least for the time being.
- Greek unemployment rose to yet another record high of 27.2% in January from 25.7% in December as the country’s depression continued unabated. Youth unemployment hit 59.3%, up from 51% a year earlier.
One would be mistaken, though, if one were to jump to the conclusion that Europe is lost for the time being. Although Greece is hugely symptomatic of the economic problem in Europe, it is but a small player. Britain, France, Germany, and Italy comprise the core of the GDP in Europe. Germany is faring well and France and Italy are stabilizing. Britain is finally coming around to the understanding that austerity equals negative growth. I expect, as do many others, that all of the countries above will begin providing stimulus, which will change the global game immensely and quickly.
Meanwhile, back here in the US, this week’s dramatic drop in unemployment claims suggests the 88,000 jobs number in March was an anomaly, an outlier if you will. As well, the current import price numbers suggest the Fed has no reason to fear inflation, so rates will stay low, and the US consumer will continue to get a break on the cost of living day-to-day.
- Import prices have fallen 2.7 percent in the 12 months ending in March. They haven’t recorded a year-over-year increase since last April.
Me thinks oil prices will continue downward, as will gasoline prices, and, as we know, food prices across the board will come down because of the corn glut, so the consumer will have even more discretionary income to spend on stuff, which suggests a peek into discretionary stocks is warranted. Clothing is a discretionary item, at least some of it is, and so as spring rolls in and winter wears off, and the consumer-not-the-man is feeling better financially, perhaps one should look specifically to discretionary clothing manufacturers and retailers for opportunity, perhaps the higher end manufacturers and retailers.
- Confidence among U.S. consumers was little changed last week as gains for top earners helped overcome growing pessimism at the other end of the income scale.
Chicken Little is still out there doing her thing, but, like the boy who cried “Wolf!” too many times, after a while, folks begin to figure out that there really is little to fear. True, healthy caution and respect for the outside elements is necessary, but, as each day goes by, the health of the global economy improves, and that means everyone will do better, which is why the market keeps pushing higher.
Trade in the day; Invest in your life …
