3 factors will keep stocks rallying
With growth, credibility and compromise all gelling at last, this run is not done. I want to be in, not out.
You need three things to keep the rally going: confidence, as in confidence in the world's central bankers; growth, and I mean growth in all countries including the United States; and compromise, as in the certainty of a deal on unemployment benefits and taxes. By the way, the certainty of the compromise is, in a way, more important than the terms of the compromise.
Growth is the most important one because growth eliminates the notion of the Pyrrhic victory. If there is growth, then the central banks are not only not throwing good money after bad, they are abetting private-sector hiring that will lead to higher tax receipts at a time of government austerity.
Confidence? Last night I went to hear the great Stanley Fischer speak at a YIVO charity dinner where he was honored. Fischer, the incredible governor of Israel's central bank, is widely hailed as the man from the IMF who saved Asia in the 1990s.
He spoke of the need for people to believe, but more important, his follow-up speaker, Larry Summers, formerly of Harvard and the Treasury and adviser to President Barack Obama, reminded us that Fischer had the bearing and the brilliance to be trusted. He reminded us that Ben Bernanke studied with Fischer and that you see the same level of confidence and credibility in Bernanke.
It reminded me that, yes, that's happening right now -- the investors of the world are feeling more confident in the credibility of Bernanke in conjunction with the IMF and the European Central Bank.
I think that growth, compromise and confidence are now all going in the right direction. That's why I think the rally's not done.
That's why I still like what I see and believe we will work our way higher, perhaps back to August 2008 levels, perhaps even to 10% on the S&P 500 ($INX). For some folks, that might not be worth sticking around for.
I know that I had thought we could finish this year up somewhere in the high single digits, and we are there. But when all three factors -- growth, credibility and compromise -- are gelling, I want to be in, not out.
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The chance for my confidence to be restored was destroyed when Spitzer went down in disgrace. It's a shame. He was doing badly needed work... and I've been a Republican since Reagan. We have people like Saks who are using super computers to play the rest of us like suckers. We have the Fed who prints money to give to banks at no interest, with an understanding that the banks turn around and invest a significant amount in the market to prop up the market. That's clear manipulation...... a house of cards. I could tell you a story how CML committed fraud and ruined my life, back before anyone cared - pre Enron. If I didn't love my wife and children, I'd shoot three of the most responsible s.o.b.'s. I have more sympathy for people who commit violent crimes of rage, than for white collar criminals who destroy lives by taking a persons dignity. I'd rather they had just shot me.
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Serious issues like drought and the deterioration of the developed world spell opportunity for this industry leader.
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