By Bob O'Brien
I have to admit last week, I was little skeptical about this stock market. I was thinking that when the un-employment numbers came out Friday we could see a big sell off in stocks. The stock market has been off the charts lately, and everyone is trying to figure out whether or not they are under invested in it.
Regardless of whether or not the unemployment numbers are off a little or come in better than expected the effect on this rally will be minimal. There maybe a little sell off, but the rally should continue.
A lot of people have tried to call this market and economy a “W”, a “V” and an “M”. I think for now it is an “IV” (pun intended) an “Inflationary V” This bull market started when “Big Ben” Bernanke made it clear that we are going to print our way out of it. We went from the “Greenspan Put”, to the” Bernanke Printing Press Put” Whatever works right?
The bottom line is we are going to see growth in the third and fourth quarter of this year, and while much of the fiscal stimulus has not kicked in yet, the monetary has kicked in.
What does this mean for stocks?
Stock will continue to go higher probably through the 3rd quarter on asset allocation money and inflationary trades, and perhaps the end of the year.
How about the Dollar? The dollar will continue to weaken and only when we see rates rise perhaps we will see the dollar start to strengthen.
How about oil? Oil appears to have calmed down, but is still going up. Historically it has been said that copper has a PhD. In economics, but what about oil? Oil really has become a temperature gauge for the global economy and when it spikes up radically, the prices cool down because it knows it is not sustainable.
And the yield curve? This is pretty much all the banks have got going for them right now, and it is big. The banks have rallied this week and it should continue.