Loading ...[Is there any need to state that I don’t agree with this?–I am just the messenger…pls. do not shoot]
The Coming Economic Boom and What It Means for StocksBy: Kevin Matras
May 22, 2021 |
Inflation Scare Redux
But inflation concerns are back once again, and with it, fears of higher rates.
Really? How many times does the Fed have to say they plan on keeping rates near zero for the foreseeable future?
Moreover, inflation, in and of itself, doesn’t slow the economy, a sharp rise in interest rates does.
So even when they do begin to raise rates, let’s say in 2024, they are essentially starting from zero. And it should be noted that over the last 50 years, there’s never been a recession (aside from last year’s pandemic-induced plunge), when the Fed Funds rate was under 4%.
And at quarter point moves (even half point moves), it would take years to get to that level.
Bullish Indicator
It’s a rare occurrence to see 95% of those stocks get above their 200-day moving average. So rare that’s it’s only happened three times since 2003. But when it did, the S&P climbed even higher and finished with gains 6 months later and 12 months later.
Moreover, Keith Lerner, chief market strategist for Trust Advisory Services, notes that 90% of the S&P 500 stocks crossed above their 50-day moving average back then as well.
He goes on to say that in the last 15 times that has happened, the market was higher in 14 of those 15 times 12 months later. And the average annual gain was more than 16%.
Granted, this usually takes place after a correction. And we’re up more than 91% from the pandemic lows last year.
But much of that gain was making up for lost ground.
And with forecasts for soaring economic growth ahead, one could make a case that the economic boom is
JUST BEGINNING!!