(Drivebycuriosity) - It`s Easter again. New York City welcomes the Christian feast with sunshine and mild temperatures. Many countries in the Western world celebrate Easter in some way or another. In Germany for example most people have 4 days off, including Good Friday (called "Karfreitag", a Catholic term) and Easter Monday. Even Wall Street was closed on Good Friday.
Easter also stands for the begin of spring. The German literature has a lot of Easter poems which are referring to the seasonal issue. The most popular German Easter riddle is "Der Osterspaziergang" (the Easter walk osterspaziergang) by Johann Wolfgang von Goethe. It starts with the line "Vom Eise befreit sind Strom und Bäche" ("freed from the ice are rivers and creeks").
Goethe`s poem also describes the stock market. Since Easter 2014 the US stock market (S&P 500) gained around 11%, even that the market stagnated year-to-date. I believe that the bull market for stocks will continue. Inflation & interest rates are at record lows (even if the Fed could start hiking her interest rates in June). Companies are reducing costs & debts, getting more efficient & productive. I assume that in the coming months companies will respond to economic growth and their expanding
markets. They will lift wages more than in recent years in oder to gain
manpower for their expansion (Wal-Mart`s wage hike could be the starting
signal). Therefore the growth of personal incomes in the US will
accelerate fueling consumer demand.
The global economy is getting a lot of tailwinds from cheaper commodities.
The sharp price drops for oil, industrial metals and some agricultures
work like a gigantic tax cut. Companies have lower costs, meaning more
money to invest (including into a rising labor force), and consumers
have more money in their wallets. More jobs, faster rising wages and
much cheaper gasoline should speed up consumer spending in the US
significantly which will boost the global economy (US imports = rising
European & Asian exports).
I also believe
that the technological progress is fostering globalization. Emerging
countries like China and India have easier access to new technologies
which is promoting their transformation into modern economies (see for
instance Alibaba). These
processes are working together, creating global economic growth in
the decades to come.
The positive macro trends (inflation, interest rates, consumer spending)
and the continuously rising efficiency (thanks to technological
progress like Internet, other software, robotics, 3D-printing and more)
will translate into higher company profits - the engine of further stock
market gains.
Happy Easter!
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