by Michael Tarsala
Talk about a wall of worry.
Jobless claims are even higher than expected. Earnings are lackuster so far, even after expectations were brought down significantly. Europe is still a mess, with Spain the latest hotspot; its 10-year government bond yields are now above 7%.
Still, stocks are rising, with a string of higher highs and higher lows since early June.
Source: Stockcharts.com
The Global Macro Monitor suggests it’s a combination of reasons.
Read their post, it’s good stuff! And here’s my own abstract:
More investment inflows from overseas
There’s a reason Buy and Hold Value investment model manager Robert Freedland bought a bunch of household-name U.S. stocks recently including Apple (AAPL): He thinks international buyers will be doing the same in coming months, helping to push up prices.
Shorts were early
Amid weak volumes and relatively low volatility, big selling following May never materialized.
QE3 expectations
The weak economic data may be increasing expectations for another round of quantitative easing, which lifted risky assets including stocks in past stimulus rounds.
Fiscal Cliff may be a mirage
Fixing budget problems by year’s end is an artificial deadline. Politicians may not work something out, but they can always kick the can into 2013.
Housing is helping
Warren Buffett noted that many economic factors are looking worse, with the exception of housing. It’s the opposite picture than it was just a year ago.
Romney could win
Rightly or wrongly, he’s seen as a pro-markets candidate. And the latest polls put him at even odds with President Obama.
Stock yields are trouncing bond yields
We’ve written about this before, but earnings yields for stocks are trouncing Treasuries – in other words, stocks are a lot cheaper than bonds.
