PreMarks {02.29.12}

According to CNBC the U.S. economy grew faster than economist's estimates in the 4th quarter of 2011.  The Commerce Department said that gross domestic product {GDP}expanded at a 3 percent annual rate. That was higher than the the 2.8 percent pace Commerce reported in January.

We stated in our January letter to clients {Part IV} that we think economic growth will be much stronger than economists were earlier projecting.  If the economy grows at a 3% rate this year then that gives us more confidence that the end year S&P earnings estimates in the $103-105 range are increasingly possible and likely too low.  That in turn gives us more confidence of fair S&P value for 2012 in the 1425-1475 range.

Not withstanding all of this happy talk we still think that stocks are short term overbought and a correction in the 4-7% would not be a surprise at this point.

*Long ETFs related to the S&P 500 in clients and personal accounts.