The consumer confidence index, which comes out Tuesday, is forecast to rise to 72.5 in May and touch the highest level since last fall. Another index, consumer sentiment, has already hit a six-year high. An updated report on sentiment will be issued Friday.
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Here are some wild stats about the current rally in the S&P 500 in 2013 which brings the gains to 17%+: The Conference Board Leading Economic Index (LEI) for April was released this morning. The index rose 0.6 percent to 95.0 (2004 = 100), a welcome improvement over the -0.2 percent last month, which was a downward revision from -0.1 percent. The Briefing.com consensus was for a 0.3 percent increase. Today's press release highlights a "continuing economic expansion with some upside potential." It was the fourth straight record close for the S&P 500. Both the Dow and the S&P 500 hit intraday record highs as well. US equity valuations are currently not symptomatic of a stock market bubble. However, with frenetically rising stock prices in the face of simultaneously deteriorating macro and micro fundamentals, two questions are begged: First, what is driving the rise in stock prices represented in broad indices such as the S&P 500, Dow Jones Industrial Average and Nasdaq? It is clearly not the recent evolution of fundamentals in the form of macroeconomic and corporate earnings forecasts. Second, how sustainable is the current rally and how far can it go? With this week’s developments and the stock over $200, “in one sense I can say this is behind us,” Mr. Hastings said. “But it’s like a partially healed bone. It’s still quite fragile. Were we to make a similar mistake, we’d be right back in the penalty box. So we’re not really out of the woods. We’re growing and we’re making good progress, but we’re still not fully back to where we were.” This is a pretty wide margin, and it made us think of this recent NFIB survey that showed that taxes and government red tape are the biggest problems facing small businesses today. Large caps are obviously more equipped to handle government requirements and red tape. Is this large-cap outperformance the new norm in the current economic environment? This articles examines the following bearish developments that are currently taking place Technical Intermarket Analysis Of Commodities, Bonds And Stocks Raises Bear Market Target For Stocks4/17/2013 Two giant markets, commodities and bonds, are in close agreement about the declining trend of nominal GDP growth. This is at variance with the message being sent from the U.S. stock market, which remains bullishly-configured and which benefits from fast nominal GDP growth. Just like in 2012, the S&P 500 went on a tear in the first quarter this year, gaining just over 10%. The start of the second quarter has seen a 1% pullback, however. Typically when the market pulls back after experiencing a sharp rally, the stocks that went up the most during the good times go down the most on the downturn. That has been far from the case during this pullback. |
It's always a good idea to keep some good articles, at least I think they are good for reference, so I can go back and read them later.
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