Stocks set record as economy reaccelerates
A surge in global manufacturing activity sends the S&P 500 above 1,700 for the first time.
After a lot of hand wringing over the future of the Federal Reserve's cheap money stimulus over the last few months, stocks are once again pushing to new record highs. And they're doing it because of solid, tangible, fundamental reasons: The economy is revving up.
Manufacturing activity data released over the last 24 hours confirms this. The U.S. ISM Manufacturing Index improved to its best level in more than two years on a surge of new orders. Production improved more than 11.5 points to 65, indicating the strongest month-over-month expansion since the recovery started. Any reading over 50 indicates growth.
And it's not just happening here, but overseas as well.
China's manufacturing sector unexpectedly returned to growth last month, suggesting the recent slowdown in the Middle Kingdom (as illicit lending practices are cracked down on) is reversing. The Chinese State Council announced Wednesday night that it would allow growth in China to slow to an unreasonable level as it works to reorient the country away from fixed-asset investment towards domestic consumption.
Japan's economy enjoyed its fifth month of manufacturing activity expansion as new orders continue to grow thanks to a cheaper yen -- which is boosting export competitiveness.
But the biggest turnaround is what is happening in the eurozone. Europe's manufacturing sector has been contracting since late 2011, throwing countries like Spain into recession as budget austerity and financial turmoil took its took on the currency union. But lower sovereign borrowing costs, a stabilization in the bond market, and renewed vigor has pushed the eurozone's Manufacturing PMI back into expansionary territory.
Even Greece, the economic basket case that it is, is on the mend. The Markit Greece Manufacturing PMI is rebounding, though still in contractionary territory. Employment and new orders are contracting at their slowest pace since January 2010.
While there are concerns on the horizon, such as the looming fiscal fight in Washington, for now, the next milestone that's set to be crossed is Dow 16,000.
I'm looking for beleaguered, economically sensitive steel stocks like Cliffs Natural Resources (CLF) to be the biggest beneficiaries of all this.
And a ramp up in global factory activity should soon translate into firmer industrial commodity prices, higher inflation, and some support for gold and silver as bond-market derived inflation expectations pop to their highest level since early 2012 as crude oil makes another run at the $110 a barrel level.
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Oil prices make run at $110 a barrel and you act like this is a good thing. This is a RICH MANS country and they could care less about the economy of working Americans.
Why yes, I just went outside and tripped over a pile 'o money. It's just everywhere.
I think the market could have shown some growth this year, but the S and P 500 up 19.6%. What was the term…oh yes…irrational exuberance.
I kept a conservative amount in the game, so "yee haw ridem cowboy" I assume.
"After a lot of hand wringing over the future of the Federal Reserve's cheap money stimulus over the last few months"
You misread the gesture. That wasn't hand-wringing. That was 83% of America shaking their fists at Bernanke as he pompously manipulated our existence for yet another month. The other 17% couldn't care less because they're directly connected to the printing presses and get theirs by Osmosis. We're headed for a war over fake money printing. Could anything be more ridiculous.
Anthony? Solid, tangible, fundamental reasons? Last month you said these were not even in sight, and today, this?
First Jubak and deflation, now you...Do the writers just grab story headlines out of a hat?
Can you think of another profession where you get paid for spinning jargon-filled nonsense without any accountability?
You would be better off turning to your own crystal ball to find out what to do with your money. Reading AM's predictions you can make money only if you do not do what he says. What a joke.
And it hits the brakes just as fast...lol
Once Wall Street takes money from the investors..
they hit the sale button and steal their profits...
Then come back the next day to play the same game..
How quickly we forget - we haven't come close to the 2% GDP growth mark in any of the last 3 quarters. The employment picture is still very bleak, not only because the U6 remains high, but because of the type of jobs that are being created - part time, low-paying, etc... And lest we forget, the markets dropped about 5% back in June when Bernanke dare even mention that at some point in the future, he just might have to consider possibly tapering QE.
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