Anyone else see the GDP numbers - 4th qtr GDP rose 5.6% despite problems in Asia, Latin America, and Russia. As a matter of fact, international trade had a negative growth impact on GDP of only 0.03%. Inflation is negligible and unemployment is at its lowest since 1969. Consumer and business confidence is rising. And with 2/3 of companies reporting quarterly earnings so far, they've beaten optimistic First Call estimates by 4.4%. Wages are rising and low interest rates are adding even more discretionary income in consumers' pockets. In addition, Asia is starting to turn around with South Korea close to paying off their IMF loans. All signs are bullish.
IMO, at current valuations, money flow becomes more important. Last week, we saw an inflow of $6.1 billion into equity funds. Stock market appears to be impacted the following week. As we all know, the exchanges are just an auction house ruled by demand and supply. Supply is dwindling with the recent influx of mergers and acquisitions and demand is increasing - boomers are reaching the age where they are starting to invest more. Since they have done such a poor job of saving up to now, they are all chasing higher returns than what is currently offered with money markets, treasuries, bonds, etc. This trend will continue to 2005 - 2010. |
