U.S. growth story turning up in stats

U.S. growth story turning up in stats

U.S. growth story turning up in stats
Starting the week, and the season, on a positive note: Indicators confirm manager's growth predictions.
 
Stock markets experienced triple-digit sell-offs last week. This is no surprise. Markets at record highs. Fall is traditionally a season of broad stock market sell-offs. Fall is the time when people come back to work and take a more sober, serious assessment of markets. So no wonder some were ready to take some money off the table. 
 
But should we assume this is the start of a long-promised deep sell-off? There are those who suggest as much. October, of course, is infamously the month in which spectacular market crashes are most likely to occur. October begins this week, the season when summer's growth really begins to give way to winter's deadening; some argue October crashes are cyclical thing, a result of deep human psychological factors.
 
We'll leave the be-witching theories and cyclical divination to others. Whether or not there is a link between the calendar and market crashes is only something that can be debated, never proven. Let's start off this week on a more positive note—let’s stick to real and solid numbers on economic activity, that is, let’s talk about the real and solid evidence that suggests a new growth cycle is kicking-off in the United States just as some fund managers have predicted. 
 
In July WP interviewed Dan Bastasic, vice president of investments and lead portfolio manager for the IA Clarington new Strategic U.S. Growth & Income fund. At the time Bastasic predicted a coming boom in U.S. industrial activity that would kick-off a broader recovery. At the time he was out front on the opinion curve. He almost sounded nuts at the time, as the data from the winter suggested the American economy had slowed dramatically, could even be going back into recession.
 
But a couple months later on his predictions are finding confirmation in the basic data.
 
Last week new stats released by the U.S. Commerce Department suggested consumer spending in the U.S. rebounded in August. This is good news. The consumer economy is 70% of the modern economy--a pick-up in consumer spending is exactly what needs to happen right now for a broad-based recovery to kick-in. Also in the report, employers are cutting back on dismissals and adding employees, good signs that consumer spending can continue to grow. That is, there are positive notes concerning the employment and consumer spending story. Jacob Oubina, senior U.S. economist at RBC Capital Markets LLC in New York, was quoted in a Bloomberg story as saying that, the "The state of the consumer is going to continue to be relatively constructive...They're pretty much on the best footing that they've been this entire cycle." This is good.
Also last week, the Bureau of Economic Analysis reported that gross domestic product was increasing at almost 5%. This is extremely strong growth. Three percent is typical in an advanced, mature economy like the U.S. But then it can be argued that a real recovery seems to be settling in. Also according to the bureau, "real non-residential fixed investment increased 9.7 per cent in the second quarter.” This is up from less than two per cent in the previous quarter. Investment in office buildings and factories grew nearly 13 per cent, up from three percent in the previous quarter, while equipment purchases rose 11 per cent up from a decline of one per cent. All of these numbers suggest a possible sudden pick-up in the American economy, especially in basic industrial activity, just as Bastasic predicted. If markets can hold on until the growth becomes clearly evident, equity investors may have to be, dare we say it, bullish, even if it is October.
 
Here we are, three months on, Europe is getting around to implementing the kid of growth oriented central bank politicise the U.S, has been practising. But while Italy is going into a triple-dip recession, the U .S. is, as a result of the looser central bank policy, now setting out on a new growth cycle. A few months ago, Bastasic said that five years of recovery have "sowed the seeds for the next secular bull market.” Now, here we are, it’s happening. If we’re lucky the rest of Bastasic’s prediction—that we could see “10% on market this year and 8-10% next year”—also turns out to be right.
 
Here's to starting off the week (and fall of 2014) on a positive note.
 
U.S. growth story turning up in stats
 
Starting the week, and the season, on a positive note: Indicators confirm manager's growth predictions
 
Stock markets experienced triple-digit sell-offs last week. This is no surprise. Markets at record highs. Fall is traditionally a season of broad stock market sell-offs. Fall is the time when people come back to work and take a more sober, serious assessment of markets. So no wonder some were ready to take some money off the table. 
 
But should we assume this is the start of a long-promised deep sell-off? There are those who suggest as much. October, of course, is infamously the month in which spectacular market crashes are most likely to occur. October begins this week, the season when summer's growth really begins to give way to winter's deadening; some argue October crashes are cyclical thing, a result of deep human psychological factors.
 
We'll leave the be-witching theories and cyclical divination to others. Whether or not there is a link between the calendar and market crashes is only something that can be debated, never proven. Let's start off this week on a more positive note—let’s stick to real and solid numbers on economic activity, that is, let’s talk about the real and solid evidence that suggests a new growth cycle is kicking-off in the United States just as some fund managers have predicted. 
 
In July WP interviewed Dan Bastasic, vice president of investments and lead portfolio manager for the IA Clarington new Strategic U.S. Growth & Income fund. At the time Bastasic predicted a coming boom in U.S. industrial activity that would kick-off a broader recovery. At the time he was out front on the opinion curve. He almost sounded nuts at the time, as the data from the winter suggested the American economy had slowed dramatically, could even be going back into recession.
 
But a couple months later on his predictions are finding confirmation in the basic data.
 
Last week new stats released by the U.S. Commerce Department suggested consumer spending in the U.S. rebounded in August. This is good news. The consumer economy is 70% of the modern economy--a pick-up in consumer spending is exactly what needs to happen right now for a broad-based recovery to kick-in. Also in the report, employers are cutting back on dismissals and adding employees, good signs that consumer spending can continue to grow. That is, there are positive notes concerning the employment and consumer spending story. Jacob Oubina, senior U.S. economist at RBC Capital Markets LLC in New York, was quoted in a Bloomberg story as saying that, the "The state of the consumer is going to continue to be relatively constructive...They're pretty much on the best footing that they've been this entire cycle." This is good.
 
Also last week, the Bureau of Economic Analysis reported that gross domestic product was increasing at almost 5%. This is extremely strong growth. Three percent is typical in an advanced, mature economy like the U.S. But then it can be argued that a real recovery seems to be settling in. Also according to the bureau, "real non-residential fixed investment increased 9.7 per cent in the second quarter.” This is up from less than two per cent in the previous quarter. Investment in office buildings and factories grew nearly 13 per cent, up from three percent in the previous quarter, while equipment purchases rose 11 per cent up from a decline of one per cent. All of these numbers suggest a possible sudden pick-up in the American economy, especially in basic industrial activity, just as Bastasic predicted. If markets can hold on until the growth becomes clearly evident, equity investors may have to be, dare we say it, bullish, even if it is October.
 
Here we are, three months on, Europe is getting around to implementing the kid of growth oriented central bank politicise the U.S, has been practising. But while Italy is going into a triple-dip recession, the U .S. is, as a result of the looser central bank policy, now setting out on a new growth cycle. A few months ago, Bastasic said that five years of recovery have "sowed the seeds for the next secular bull market.” Now, here we are, it’s happening. If we’re lucky the rest of Bastasic’s prediction—that we could see “10% on market this year and 8-10% next year”—also turns out to be right.
 
Here's to starting off the week (and fall of 2014) on a positive note.