Thoughts {09.14.15}

Posting today but will be out tomorrow.  Markets likely to be on hold this week until the Federal Reserve's decision on interest rates later in the week.  It seems as though the world is evenly split on whether they raise on Thursday.  I think they go higher but that's a guess and I wouldn't want to have to live on the difference.  I think markets have the potential to react positively either way but we'll just have to wait and see.

One of the reasons I think we might see a raise is that the US economy is doing pretty well right now.  See this excerpt from Dr. Ed Yardmen's blog:

"Notwithstanding the slow pace of global economic activity, we expect enough strength in the US to drive earnings higher. While the S&P 500 Transportation index is down 19.3% from its record high on January 22, measures of actual transportation activity are very strong in the US. Railcar loadings of intermodal containers rose to a record high in early September, up 5.3% y/y based on the 26-week moving average of the data. 

The ATA Truck Tonnage Index rebounded 2.8% m/m during July, remaining on its solid upward trend with a y/y gain of 3.7%. It’s just shy of its all-time high reached in January of this year. 

The plunge in gasoline prices has supercharged gasoline usage, which is up 3.2% y/y through early September. Vehicle miles traveled rose to a record high during June. It’s hard to do all that driving without stopping along the way to do some shopping." 

Now there are still issues with growth here at home compared with the rebounds from last recessions.  We're about a point behind in annualized GDP in relation to previous rebounds.  That is GDP growth remains in the 2-3% range versus the 3-5% range we've seen in previous recoveries.  But we ARE growing and things have continued to get better.  I think this is suggestive of a market that finds a floor at some point for this decline if we haven't already.  Economic bear markets begin after the economy has peaked usually not before.  So far we've seen no evidence of this.

And just so we don't seem one-sided in terms of the markets go read "Don't expect New Stock Market Highs Any Time Soon" from MoneyBeat.  They are basically making the argument we made here back on August 31. 

Back Wednesday.

*Long ETFs related to the S&P 500 in client and personal accounts although positions can change at any time.