The economic news that came out last week and this morning is quite positive. In other words, the drop today is not due to a fundamental change in the economy and its current trends. The volatility is due to our wonderful Super-Committee whose only concern is re-election. Be sure to read all of the following. Data from last week shows: - 70% of SP500 companies Q3 earnings surprised on upside - averaging 9% over estimate = surprised the analysts.
- Retail spending report - surprised on upside.
- Empire State Manufacturing - positive - and 6 month outlook especially positive.
- Philly Fed Survey - positive - and 6 month outlook especially positive.
- Industrial Production up 0.7% vs 0.4% expected - upside surprise.
- industrial Capacity Utilization 77.8% vs. 77.6% -upside surprise.
- Employment - Initial Unemployment Claims, 388K vs. 395K expected -upside surprise. Two readings in a row under 400k (still long way to go)
- Housing Index - from 14 to 17 to (latest) 20 - upside surprise. (still long way to go)
- Housing Starts/Permits - surprise on upside including existing home sales number today.
- inflation is still under control.
Important to Note. The conditions that exist before a major "bull market" are typically:
- Poor psychology, extreme pessimism, fear
- Low valuations (even with large increases since 3/9/2009 since earnings have increased so much)
- Monetary accumulation
Hmmmm.... sounds familiar, doesn't it? We need a catalyst to set it off. Probably won't be the super-committee though still possible they could shock us today. Might be the elections...
That's it - have a very happy, safe and love-filled Thanksgiving! |
