Stocks surge as economy reaccelerates
Dow 16,000 is in sight as global activity increases.
Your eyes aren't deceiving you. Things are, in fact, actually getting better in the real economy. And that's pushing stocks to new highs as the Dow Jones Industrial Average closes in on 16,000.
On Thursday, investors were encouraged by a surge in the Philadelphia Federal Reserve Bank's manufacturing activity report to indicate the strongest monthly growth in factory activity since March 2011. Strength was led by business activity and new shipments. This comes on the heels of a strong Empire State Manufacturing report Monday. All of this suggests factory activity is spooling up as business inventories have reached unsustainably low levels.
By all indications, the improvement should continue.
That's because a combination of inventory restocking, stabilization in Europe, improvement in Japan and tailwinds from healthy wage growth here at home is driving all this. Look at U.K. retail sales, which are increasing at a 5.2% annual rate over the past three months. Eurozone industrial production activity, shown in the chart below, is basing and turning higher. In Japan, machinery orders soared by a 16.5% year-over-year rate in May as a weaker yen boosts export competitiveness.
Turning to the market, insiders have been preparing for this surge higher for weeks. The professionals based on things like large futures contracts and options market activity, locked and loaded new long positions in June. So they're still waiting for retail money to come in, push the Dow over 16,000, and bring in the liquidity they need to exit their positions.
What will be the catalyst that eventually brings the show to an end?
Most likely, it'll be the damage caused by the rise in energy prices. That, in turn, will translate into inflationary pressure and force the Fed to pull back on stimulus. Much of the reason stocks have been performing so well over the last few weeks, in addition to improvement in the real economy, has been a softening of its "tapering" message related to the reduction of its ongoing $85 billion-a-month bond purchase stimulus.
So not only would ongoing increases in energy prices pinch consumers and the economy, it will threaten the cheap money that this market lives and breathes by. With crude closing in on $108 a barrel, it's up nearly 20% from where it was this time last year. Moreover, it's approaching prior peaks hit in early 2012 and 2011 that were associated with stock market tops for the reasons I've mentioned.
But for now, the trend is up.
As the uptrend matures, junkier, riskier, heavily shorted stocks are perking up. Stocks like beleaguered Greek lender National Bank of Greece (NBG) and oil and dry bulk shipper Frontline (FRO). I've added both to my Edge Letter Sample Portfolio.
Disclosure: Anthony has recommended NBG and FRO to his clients.
Check out Anthony's new investment newsletter, the Edge, and his money management service, Mirhaydari Capital Management. A two-week free trial has been extended to MSN Money readers. Click the link above to sign up. Mirhaydari can be contacted at firstname.lastname@example.org and followed on Twitter at @EdgeLetter. You can view his current stock picks here. Feel free to comment below.
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What a blistering hot steaming pile this is!!! Economy gains momentum???? To which 'economy' is he referring? On what planet does this dolt live?? It certainly isn't this one because on this planet the 'economy' is gaining nothing but debt and is right on the ragged edge of falling over on its head and doing a face plant.
Sorry, Tweedles, none of us are buying into this disinformation or lies from you.
Do any of these prognosticators live in the real world? Do any of them work outside of Wall Street? Go out and ask 100 small businesses and you'll find that 80 of them have no plans to hire anyone over the next several years as there are no positive signs of an impending "recovery".......oh, that's right, according to the insiders we have been in a "recovery' since 2009 (ha ha ha......).
Oh, the projected growth in the GDP for June was less then 1% (betting, as with all other estimates from these prognosticators, that it's revised downward. So, Q4 of last year was less than 1% and Q1 of this year was revised downward by 25% to a pathetic 1.8%. Toss in a number for Q2 of this year which will be barely over 1% and you've got a 9 month trend of slightly higher than 1% in "growth".
Am I missing something or has Barry pulled the wool over everyone's eyes? Too many of you folks have to lay off the "hope and change" elixir or the new and improved formula "forward".....
PLEASE!! PLEEEEEEEEEEEEEEEEEEASE!! SOMEONE TELL THIS NEWS TO DETROIT!!!
they seemed to have missed the memo, and filed for bankruptcy, the LARGEST US city that is!!
the little titbit of info on the fictional fact that:
que circus music now please............thank you.
heheeh and the stimuli has ended and that's why the economy 'reaccelerates' what a clever word! oh wait!!! the stimuli are HARDLY ended, the economy is HARDLY standing on its OWN TWO feet, now is it, so what the hell are you whackjob talkin' bout?? everytime there's so much as an inkling that the stimuli is coming to an end the market panics, so again, what in THE HELL are you whackjob lacky obamazombies blubbering about???? DOW at 16,000 territory? and?? so?? you azzwipes tout that like it's some 'holy grail' of the economic landscape when it's a ZERO impact on employment or the labor participation rate....ooooohhhh!! look at the pretty numbers!! oooooohhh! DOW' s going up, up , yea and?? sure as hell ain't helping Detroit Mich now is it?? and it used to be a boom town at one point, boy have times changed! for the worse with this phucked up regime in charge!!
it certainly isn't JOhn Q. PUblic buying stocks, bonds or whatever....if that was the case the economic picture would be off the charts worthy of mention and proving that people are now working at steady PERMANENT jobs, and can now 'afford' to 'play' in the market....
not some bullshyt TEMP positions...how's one supposed to support a mortgage or car loan or anything on TEMP??? instead we have the gov't 'buying it's own product' in effect, man you whacked out obamazombies will do and say anything to cover up the disastrous economic failure that is the obama regime, notice you don't mention what's going to happen when stimuli ENDS!! want me to tell you jackazzes what happens, you ain't gonna like it!!!! well you can always blame somebody I'm sure.....
and this just in!!! Detroit becomes largest US city to file for bankruptcy hahahah!!! hahaha!! ah!! ahahahahahaha!!! oh man, that's a good one!! because I SAW THAT ONE COMING!! ahahahahah!!!!!
Capitalism has been defined by adherents and detractors: Milton Friedman said, "The problem of social organization is how to set up an arrangement under which greed will do the least harm, capitalism is that kind of a system." John Maynard Keynes said, "Capitalism is the astounding belief that the most wickedest of men will do the most wickedest of things for the greatest good of everyone."
Perhaps it's best to turn to someone who actually practiced the art: "Capitalism is the legitimate racket of the ruling class." Al Capone said that.
Capitalism is a cult. It is devoted to the ideals of privatization over the common good, profit over social needs, and control by a small group of people who defy the public's will. The tenets of the cult lead to extremes rather than to compromise. Examples are not hard to find.
"Capitalism is the legitimate racket of the ruling class."
Yes, the economy is indeed gaining speed. Too bad that it's downhill!!!
Have a Merryday, has finally came over from the Dark Side...
Yes Antman, give me your hand come walk with me in the Sunlight in the Land of Milk and Honey.
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Stocks drift lower and bonds are hit as investors await the Fed. Prepare for higher volatility this week.
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