“In your life expect some trouble
But when you worry
You make it double
Don’t worry, be happy…”
Bobby McFerrin
Higher and higher. The stock market has gone in only one direction since our last post and that’s been up.
As of yesterday, the Dow Jones Industrial Average had risen for 10 straight days for its best performance since 1996. The S&P 500, likewise, surged past 1,560 having gained 3.05% in the past month.
Don’t worry, be happy
And, so what if the world is going broke, if that genius Ben Bernanke continues printing money, the Dow could rise from its current 14,500 range all the way up to 18,000 by the end of the year, according to Wharton School Professor Jeremy Siegel.
Don’t worry, be happy
Meanwhile, the economy is buzzing along now that the U3 unemployment rate has dropped an amazing 0.2%, from 7.9% to just 7.7%. Of course, the unemployment rate was 67% lower back in 2007, when it was just 4.6%. But it’s headed in the right direction!
Some gloom-and-doom types point out that the real unemployment rate, the U6 rate, is still 14.4% and the economist who runs the Shadow Government Statistics Web site claims that unemployment is as high as 23%.
If only! As long as unemployment is high, The Fed will continue its quantitative easing program and, as a result, the stock market will keep buzzing along. Maybe Professor Siegel underestimated the Dow?
Don’t worry, be happy
S&P 500 One-Month Performance
And there’s more good news. We can predict, without any doubt, that, unlike Europe and much of the rest of the world, the United States will not be in a recession anytime soon.
We know that, because the Federal Reserve Bank of St. Louis says there is only a 0.16% chance of a recession. You know the St. Louis Fed is right, because it bases its conclusion on data “obtained from a dynamic-factor markov-switching model applied to four monthly coincident variables.” How can it be wrong?
That should be encouraging news if you’re one of those unfortunates who have been out of work for more than a year and are no longer included in the unemployment rate.
Don’t worry, be happy
Some are worried now that the strengthening dollar will hold back the surging stock market. Of course, truly patriotic Americans want the dollar to be the weakest currency in the world. A weak dollar makes exports cheaper and imports more expensive. You don’t even need protectionist tariffs when you have a weak dollar.
China was giving us a “run for the money,” if you’ll pardon the phrase, but when we wrote about this war for weakness in mid-February, but at least the euro was crushing the dollar, having risen 13% against the dollar since last summer.
Since then, though, the dollar has gained 4.5% against the euro. But don’t worry. We can just print more money. That will give the market another boost. So be happy.