Economic Improvement Opens Up the Road Ahead

by Bryan Perry | August 20, 2012 10:30 am

Some better-than-expected quarterly numbers from technology and financial companies trading up have helped restore investor confidence after three months of market turmoil. The appetite for taking on risk has risen in just the past two weeks as rhetoric of fiscal stimulus permeates trading floors; if the economic data doesn’t come in as expected, investors can expect aggressive central bank intervention.

The higher trending of the major averages also suggests an extension to the fiscal cliff issues will find its way through Congress before the election, pushing out the business of spending and taxes until spring 2013. We can only hope that’s the case, but it seems to be what the market believes right now. Did you notice this is the first weekly update where I haven’t mentioned Europe?

As long as the economic calendar keeps coming up with fresh data that shows incremental improvement in manufacturing, consumer spending, housing and labor markets, the equity markets will keep trending higher and the bond markets will trend lower. It’s a healthy sign, and even though we have yet to see a pattern establish, it’s a good sign regardless.

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