Meaningful bullish news emerged from just about all corners of the economy today. Remember talk just six months ago about a recession? Hard landings? Soft landings? Those stories seem to be a thing of the past.
The day's morning headlines on Bloomberg.com read like a bull's fairy tale. While we usually reserve the headlines for our "Daily News" section on MarketMinder, it's worth highlighting the fact that today's headlines are a first class example of what we've observed all year. Aggregate economic news, by and large these days, is positive. Most negative stories tend to be anecdotal or about "potential" worries only.
- US June Producer Prices Unexpectedly Fall; Core Rate Rises 0.3 Percent
o For all the talk about inflation risks this year, meaningful indicators (and even dubious indexes like producer prices) aren't showing anything but benign price increases.
- Merrill Lynch Profit Increases 31 Percent on Trading Gains, Banking Fees
- Coca-Cola Profit Beats Estimates on Higher Beverage Sales in Europe, Japan
- J&J Profit Rises 9.3 Percent on Consumer Products, Antipsychotic Risperdal
o Earnings season is off to a roaring start. Some of the world's largest corporations are seeing big profit increases—well ahead of expectations and above historical trends. Merrill, Coca-Cola, and J&A are all bellwethers for the global economy and reflect a strong environment.
- Foreign Buying of US Assets Unexpectedly Surges to Record $126.1 Billion
o Recall talk just a few months ago of carry trade implosions and the threat of dried up US foreign investment. What happened!? Looks like the US is still a pretty popular place to invest.
- Industrial Production Climbs 0.5 Percent; Plant Capacity at 81.7 Percent
o US industrial output continues to expand.
- Access to Acquire Lyondell Chemical for $12 Billion After Losing Huntsman
o …and the M&A boom continues. High M&A activity is bullish for stocks because it bids up shares and takes equity supply off the market. We're right on track for a record year!
Conversely, here are a few of the day's dour headlines:
- Goldman, JPMorgan Are Saddled With LBO Debt They Can't Sell to Investors
o This makes little difference to the global economy—these firms are big enough, and healthy enough by far to withstand a little more debt. Aggregate credit spreads are showing no signs such activity is becoming chronic.
- Intel's Profit Rises 44 Percent; Shares Decline as Margins Trail Forecasts Intel
o Intel's operations might not be running smoothly, but it's interesting to note the world's largest semiconductor maker showed an increase in sales for the first time in over six quarters.
- Whole Foods' Board Forms Panel to Investigate Chief Mackey's Web Postings
o A classic non-story for stocks. Whole Foods is a tiny company, and its CEO's questionable blog activities won't move stocks at all.
Today's headlines are a great representative of what we've seen throughout 2007—news that eradicates unfounded worries and fears of economic meltdown. 2007 continues to be a great time for stock investing.