Updated: Mar 8, 2021
by Robert Holman | The Defensive Advisor | February 16, 2021
MARKET BULLISH … Rating of 8 (0 - 4 is bearish, 5 is neutral, 6 - 10 is bullish).
ECONOMY and MARKETS. Even though the bull market has run for an extended period, increases in October – January economic indicators abound - 4th Qtr. Real GDP, Dec. Industrial Production and Capacity Utilization, US Money Supply, Household savings, oil prices, bond prices, etc. – even though this was a period of caution and retrenchment due to coronavirus. Some economic indicators are shrinking as expected – Dec. Retail Sales and Jan. Civilian Labor Force – yet the unemployment rate(s) are falling, a very strong sign of growth. Jan. Retail Sales data will be released tomorrow. All of these figures are coincident or lagging indicators.
CHANGING. About 14% of the US population has been vaccinated at least once. When enough [people have been vaccinated, economic life should return to normal. The market always looks ahead, and in 4-6 months, that figure will be much, much higher.
RISKS. Possible future increases in inflation and interest rates – maybe 9 to 18 months from now – are still a possibility. And it is also possible that some new coronavirus variant could prove to be especially deadly. Currently inflation is mild and current interest rates are till falling.
OTHER. Bitcoin is becoming so popular that its price exceeded $50,000 per coin earlier today.
CONCLUSION. The recent fiscal stimulus package and the virus inoculations are leading market participants to foresee a period of accelerated economic recovery and strong growth.
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