As noted many times, the major difference between today and fall 2008/winter 2009 is the recovering American economy. According to a survey by the National Association for Business Economics, the American economy is expected to expand by 3.2% this year and next. In February this same group projected a 3.1% growth rate.
If the economy does grow at this pace, this would be the strongest consecutive periods of expansion since 2003 and 2004. Wow!
Yesterday stocks were again volatile. In my view the economic data was largely dismissed and all focused upon the happenings in Europe. What will happen today? There is more housing data, a regional manufacturing index, inflation and confidence surveys released. All can influence trading.
Last night the foreign markets were down. London was down 2.66%, Paris down 3.47% and Frankfurt down 2.76%. Japan was down 3.06% and Hang Sang down 3.47%.
The Dow should open sharply lower on mounting concern that Europe debt crisis will endanger the global recovery. The Korean situation is also increasing nervousness. There are reports that North Korea ordered its troops last week to prepare for combat. The 10-year is up 21/32 to yield 3.12%.
Kent Engelke
Chief Economic Strategist/Managing Director
Capitol Securities Management
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