I’m delighted as usual to share Steve Peasley’s weekly
analysis of the economic news. There are some really contradictory signals coming out of the US economic data right
now. Are we seeing green shoots of recovery? Are we overdue for a stock market
correction? Why is the US dollar strengthening against other currencies? Is the
creation of new jobs sustainable? This
is Steve’s take on it.
Economic numbers were quite good this week and this
supported the market as it went higher. The US economy is gathering a little strength
with unemployment claims dropping again. With jobs being produced, this created
some underlying support for the stock market.
Remember though that bond and other asset yields remain at
all time lows globally and so there are piles of money looking for places to go
and if stocks can show even a short term return, that’s where this money will
go. This is my view about what is artificially creating stock price growth,
rather than any great optimism about long term returns or outlooks. So I completely
agree with Steve that we are overdue now for a stock market correction.
Confusingly, the US Dollar is getting stronger while the
stock market is going up. This is exceptionally unusual. Usually the stock
market goes up when the US Dollar gets weaker. One main reason is that other
economies worldwide are not keeping up with or not as good as the US. The US
economy may not be that great, but it is way better than the majority.
My thanks as always to
Steve for his excellent insight
and analysis.
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