Merry times are here. We’re happy. You’re happy. Wall Street is happy.
The fact that the economy is expanding despite a lack of strong jobs growth is encouraging. We are seeing what economists call a jobless recovery. And this will likely continue in 2011, as the unemployment rate is expected to remain high, but President Barack Obama’s $858-billion tax extension will help drive consumer spending and economic renewal.
The final estimate of the third-quarter GDP was slightly weaker than expected at 2.6% versus the 2.7% estimate, but above the 2.5% second reading.
The charts of some of the key stock indices are positive and point to potentially more gains after the break at the previous chart tops. I’m encouraged by the ability of the major stock indices to edge higher after breaking the previous chart tops.
As I said in my previous commentary, I’m positive for U.S. and Canadian stocks in 2011. I expect technology and small-caps to drive trading again in 2011.
Outside of the U.S., I like the BRIC countries, comprised of Brazil, Russia, India and China. Also take a look at the smaller Asian countries, such as Malaysia, Indonesia, Korea and Taiwan.
One region of concern in my view will be Europe. As you know, there is muted growth and rising debt and deficit levels in Greece, Spain, Portugal, Ireland, Italy and Belgium. If not for capital from Germany and France, it would be far worse there.
I will discuss the situation in more depth in the New Year. Until then, I wish you all a safe and happy holiday season.
Iconic Chart Shows Biggest Devaluation of Our Generation
Yesterday, China’s central bank said its foreign-exchange reserves have hit $3.0 trillion for the first time in its history. China is awash in dollars. The U.S. itself has too many dollars floating in its financial system. Is it any wonder the U.S. dollar is collapsing in value against a basket of currencies made up of other major currencies?
Taking Stock: A Lot of Good News Already Priced Into Stocks
Most capital markets are due for a correction and that makes it more difficult to be a new buyer of stocks, bonds or commodities right now. All you have to do in the equity market is pull up a one-year stock chart on the S&P 500 Index and you’ll see the tremendous capital gain. The market has already priced in strong first-quarter earnings and, if companies don’t announce strong second-quarter visibility, share prices will retreat. So, what's next for investors?
A Safer Way to Invest in China: The Large-cap Chinese ETF
Playing the Chinese capital markets involves excessive political and economic risk. While the risk is high in trading Chinese stocks, especially of the small-cap variety and for smaller trading accounts given the current selling of Chinese reverse merger stocks, there's another, lower risk way you could play China.
