GLOBAL MARKETS-Investors wait for Europe, U.S. fiscal progress

Comments (1)
LuisdeAgustin wrote:

Some investors need not wait for the article’s considered actions to play out. Based on Wainwright’s confirmed and ongoing research, the S&P 500 already looks fully valued relative to its classic recovery trajectory from 3½ years ago. It shows every sign of having returned to the flat trend that it has followed since the end of the 1990s. David Ranson, Wainwright’s director of research, attributes the lack of slope in the trend to adverse economic policy: a reliance on federal spending and money creation along with the constant threat of higher tax rates and more oppressive regulation.

The Fed has now locked itself into permanently near-zero interest rates, another source of economic drag. According to Ranson, until interest rates are driven once again by market forces, savers will go on strike and credit will be rationed. The economy’s ability to grow depends in part on credit being allocated to the most productive uses rather than the most politically connected constituencies. Therefore, the investment industry consultancy expects the US economy to continue growing at a rate of only 1 to 2 percent.

The rest of the world is another story comments Dr. Ranson in a November client conference call), and the shop’s best leading indicator suggests the mild slowdown of the last year or two will end in the next few months. Upside potential in many stock markets around the world greatly exceeds opportunities in the US. Even euro-zone equities have handsomely outperformed the US the last several months, and the firm expects them to continue climbing even as the European recession continues.

Luis de Agustin

Nov 15, 2012 7:13pm EST  --  Report as abuse
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.