otbricki

S&P Set for 50%+ Gains? Not So Fast, UBS

You are missing that the US is still relatively isolated in terms of its economy on the demand side. Only 8% is tied to exports.

Certainly economic problems in China are not going to impact demand for US goods and services, and will help keep commodities costs down. A decrease in European demand won't help, but even if it goes down 10% it is well less than a 1% hit on US GDP.

Slowing economies in Europe and Asia, lower commodity prices and the recent strength of the dollar will help curtail inflationary pressures for a while as well.

Recent efforts to push down mortgage rates and lower energy costs have a good chance to start putting money in the pockets of consumers. It this happens it is very easy to forecast a V shaped recovery starting mid-2009.

Given that the S&P was 1500 not long ago a 50% increase by the end of 2009 is quite plausible.