Thursday, January 17, 2013

Stock Market: A Shot In the Arm?

This morning we got economic news which were f….g good. The weekly jobless claims plummet 37k to a five-year low and the American housing starts jumped 12% to a four-year high (bloomberg).

The numbers could be a shot in the arm of the stock market and fuel the continuance of the ongoing rally. They show that the economy is doing better than many believe.

It seems that the healing of both - job market and home market - is getting traction. Both trends are significantly enhancing the wealth of the consumers and are encouraging them to expand their spending. Hence the consumer spending, the engine of the economy (around 70%), could accelerate in the coming months leading to a stronger growth of the global economy (Europe & Asia are participating via their exports to US).

This is also good news for the stock market. Many - including a lot of fund managers - are still underinvested because they don`t believe in the economic recovery. When the economic growth continues they will have to come back. Otherwise they would come under performance pressure for missing the expected gains in the stock prices.

No comments:

Post a Comment