INSIGHTS
JUL
15
WEEK AHEAD...
The Dow and the S&P are again in record territory. If past history is any guideline we could see a very significant move to the upside. Historically, when the Dow reaches and new high it tends to waffle for up to six months before making a significant move. This move could be a continuation of the four-year bull market or the peak and then a major pullback (see 2008). We are firmly in the camp of a continuation. Money has few significant places to flow to. We have an economy that is starting to expand, corporate earnings are good, and interest rates are still low by historical standards and a solid housing sector. The markets absorb any bad news with pullbacks and buying opportunities. The only stick in the spokes in the wheels of this economy will be China.

China. While not a wildcard, still a very unpredictable piece of the World economic puzzle. Will GDP growth come in at 7% or higher? Will the government add it’s own form of stimulus or create impediments to growth will trying to coral and correct the inequities in the Chinese economy? Will the Chinese banking system become more accountable and standardized? These are important, legitimate concerns and one of those questions will be answered Monday when the Chinese GDP gets announced. We expect it to come in a little above 7% and the future GDP forecasts to be in the 7% range for the rest of the year.


The data coming this week will continue to highlight Housing and the increase in consumer sentiment. Both of which will come in better than expected. Chairman Bernanke speaks on Wednesday and don’t expect any revelations or major insight into a time frame for this long-awaited tapering of QE3. This could go on and on and on…