I always love to find a statistic or some other business or economic fact that makes me feel comfortable that my positive view on the global recovery and the stock market rally is on the money. I found one yesterday which I have to share with you.
Dow on the rise
Yesterday, Wall Street defied the bears again with the Dow Jones index hitting a 13-month high.
As per usual, stocks and commodities headed north while the greenback or US dollar went south. This has been the trend and it will keep going that way until the Yanks raise interest rates, I guess.
(I don’t like tipping currency as it has a history of changing drivers just when you think you have nailed it!)
The stock market rally was powered by the G-20 finance ministers, who over the weekend gave stimulus the big thumbs up and warned their member countries not to get too cocky and start withdrawing the assistance that was creating the economic recoveries right around the world.
These money maestros of the G-20 are not taking chances like our Reserve Bank with their economies, which are in a lot more trouble than ours.
As a consequence, the Dow jumped 204 points to 10,227 while the S&P 500 was up 24 at 1,093.
Santa Claus rally
A guy who has been on the money for quite some time, Jordan Kotick, head of global technical strategy at Barclays Capital in New York says the recent selling globally was a typical month-end move. This has happened for five-months on a trot.
He is tipping the S&P to reach 1200 by year’s end and so that’s about nine per cent in less than two months, if he is right.
Last week, I tipped a Santa Claus rally as November and December are great months for shares.
Undoubtedly we will see ups and downs, but over the next six months I expect more ups than downs with the US economy showing much better economic signs of life than many expected.
And I do think the continued improvement of the US economy is critically important to the stock market rally and the overall strength of the global economic comeback.
This is where the great economic fact comes in.
Morgan Stanley recently showed that two-thirds of the 200 US companies in the S&P 500 that weren’t exporters had shown revenue growth in the last earnings period.
Lots of US critics have said the only companies doing well in the USA were those that have a big exposure to exports. A company such as IBM fits the bill here. However, to find out that non-exporting US companies have done well on the revenue side means that Americans are coming back faster than most of the analysts have been predicting.
That shows the Yanks have a lot more potential than the doomsday merchants would have us believe. Go America!
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