My feeling is it isn't. But that's to bet against the mood on Wall Street at the moment, where there definitely seems to be a feeling that the worst is now behind us, and that normal business cycle upward-traction will gradually start to lock-in. I think they may be wrong in this sentiment even as far as the US is concerned. My reasoning is that we need to look out more towards what is happening globally. Firstly I doubt the currency 'correction' will be positive for global growth. Japan and Germany are going to feel the pain. That, I suggest, is the intention. The German discomfort will be a drag on the eurozone economies generally. Meantime China should go full speed ahead on outsourcing. I haven't found a published source on this yet, but I did hear a radio report that a recent business survey in Germany found that 25% of German manufacturing enterprises responded that they were actively considering relocating some, or all, of their production out of Germany following the euro rise.
Taking T-Salon's point that China's growth is export driven rather than internal consumption driven, this is not going to pull global growth forward enormously. So we face a US economing, firing on only three cylinders, with a relatively weak job market, trying hard to pull the entire global train, and looking for export markets. Not exactly a boom around the corner scenario in my book. If we add to this the fact that the demographic (ageing) factor should be gradually locking-in, then this uphill climb will only be notably more so. So my prognoisis, for what its worth, is the tonic of 'one step forward two steps back' will continue, with the 'recovery' forever seeming out there, but 'just around the corner'. I may be right, or I may be wrong. I think we are getting near to the moment when all theories will be tested. George Bush has his road map, and I have mine.
US investors applauded the release of positive reports on consumer confidence and the housing sector and sent Wall Street broadly higher by the close. "The consumer confidence number suggests the consumer is anticipating a strong economic rebound later in the year," said Peter Cardillo, president of Global Partners Securities. "The fact we escaped a terrorist attack over the weekend is adding to the rally." The Dow Jones Industrial Average surged 179.97 by the close to 8,781.35, rebounding from steep losses at the opening bell, after the Conference Board reported that its May consumer confidence index was at 83.8, up from the previous month.The broader S&P 500 added 18.26 to 951.48, while the tech-heavy Nasdaq climbed 46.60 or 3.1 per cent to 1,556.69, led by a rally in semiconductor stocks."The market is also interpreting the falling dollar as a short-term positive," Mr Cardillo added. He said the weakening US currency was good for US stocks because it helped exporters exert more pricing power in overseas markets. "This market does seem to want to move higher and it suggests the stock market is discounting better economic times ahead".Positive home sales figures spurred a small flurry of interest in home building stocks."Sentiment in the marketplace, coupled with lower rates, is causing people to put money into home stocks," said Mike O'Hare, head of listed trading at Lehman Brothers.
Source: Financial Times