Embrace the Horror!October 22, 2012 Posted by: Joe Morgan, CFA
Welcome to my nightmare
I think you're gonna like it
I think you're gonna feel...you belong
We sweat, laugh and scream here
cuz life is just a dream here
You know inside you feel right at home here
- Alice Cooper
With Halloween just around the corner, it is an excellent time toreflect on the horror the economy has faced, realizing good timeswill return though they may have a new definition.
The 14.2 trillion dollar U.S. economy has faced a great beast,stared it down, and is now building toward recovery. Though wecertainly took our licks in the process (and yes there are more tocome), it is now time to look forward realistically to a growtheconomy, building today for the opportunities to come tomorrow.
At times like these, expectations of both market and economicperformance seem to split with seemingly radical views on eitherside. There are those who still expect the economy will growquickly beginning as early as the first quarter 2010 as quicklyemerging inflationary fears drive the Fed to ramp up interest ratesin an urgent fashion.
There are those who feel we are headed for a "double-dip"recession, with economic activity falling briskly from here and aFed left impotent as evidenced by its current empty bag of tricks.
It is now time for both of these camps to take a more realisticview and consider each other's projections. Just as politicalviewpoints can be polarizing at times, so can opinions on othertopics, and economic activity is not immune.
Instead, consider this Thursday's GDP release expected to be 3.2percent. Though much of this growth is a direct result ofgovernment spending - which by definition is temporary given therest of the economy must "pay" for it at some point - most anygrowth today is quite welcome.
Additionally, it is clear this quarter's growth spurt is but a blipin the current trend of level, or perhaps only slightly positive,activity. But there are signs of future growth on the horizon.
Of course, a higher and rising stock market helps, but the recentpickup in M&A and IPO activity bode very well for the lagginginvestment...Read More