(Drivebycuriosity) - It`s Easter again. 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").
Right on time for the begin of spring the US stock market showed some spring fever and recovered from its recent losses. The recovery is well-founded because the US economy is getting better and the fears about an allegedly collapsing China are overblown. In February American companies added 230,000 workers to payrolls, the
unemployment rate stayed at 4.9%. The latest numbers for personal income
& spending, retail sales, industrial production & durable goods
orders all showed solid growth as well.
I believe that the bull market for stocks will
continue for years. Inflation & interest rates are still very low (even that
the Fed will continue hiking her interest rates this year). 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 order to gain
manpower for their expansion. Therefore the growth of personal incomes in the US will
accelerate and so fueling consumer demand.
The global economy is still getting a lot of tailwinds from cheap commodities. Last year`s price collapse for oil, industrial metals and some agricultures
works 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 cheap gasoline should speed up consumer spending in the US which will foster the global economy (US imports = rising
European & Asian exports).
Companies also are benefitting from the technological
progress - evolution of Internet and other software (including AIs), robotics, 3D-printing and more - and are getting more efficient which will translate into rising earnings. The technological progress is fostering globalization as well. Emerging
countries like China and India have easier access to new technologies
which is promoting their transformation into modern economies. These
processes are working together, creating global economic growth in
the decades to come.
Happy Easter!
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