Just like Hurricane Arthur which blew up the East Coast on July 4, annexation in Ukraine, war in Iraq and Syria, Government scandals, and a 2.9 % negative GDP did little damage.
Janet Yellen our new FED Chief is worried more about a 6.1 % unemployment rate than inflation or asset bubbles. She has just re- assured us of a continued easy rate policy ahead.
Gold and other commodities are rebounding while stock margin debt hit new all- time highs exceeding 2007 levels. Yet, no worries from Central bankers who focus on fragile economies in the U.S., Europe and Japan and some Developing markets.
The fact that the USA is now the world’s biggest oil producer, having just overtaken Saudi Arabia in the first quarter and remains the world’s largest natural gas producer since 2010 has helped keep the lid on energy prices. No recession is on the horizon and GDP in the 2nd half should go positive. No threat of rising rates keeps the party going.
Earnings are expected up again in 2014 but like last year, single digit gains do not post an obstacle to outsized stock market gains. The 2nd Quarter estimated growth rate for S&P earnings is 4.9% with revenue up 2.7%. Earnings are helped by company share buy backs. Dividends continue to go higher.
Intermittent 10 % stock market corrections have taken a holiday this cycle as we have gone 32 months without one. Stock valuations are stretched but not excessive at 15.7 times forward earnings estimates of $126.17. Peak valuations have reached as much as 25 times in the past.
As Laszlo Birinyi recently said “This is not an ordinary, average, typical or normal bull market”
Market participants have come to realize that caution does not pay dividends, interest or capital gains but stocks and bonds do.
Douglas Coppola
John Coppola
July 7, 2014
Disclaimer: This communication is for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to purchase any interest in any investment vehicles managed by Client First Advisors, LLC or an associated person or entity. Client First Advisors does not accept any responsibility or liability arising from the use of this communication. No representation is being made that the information presented is accurate, current or complete, and such information is at all times subject to change without notice. Opinions expressed may differ or be contrary to the opinions and recommendations of Client First Advisors. Client First Advisors does not provide legal, accounting or tax advice. Any statement regarding legal, accounting or tax matters was written in connection with the explanation of the matters described herein and was not intended or written to be relied upon by any person as definitive advice. Any discussion of U.S. tax matters contained within this communication is not intended to be used and cannot be used for the purpose of avoiding penalties that may be imposed under applicable Federal, state or local tax law or recommending to another party any transaction or matter addressed herein. Each person should seek advice based on its particular circumstances from independent legal, accounting, and tax advisors regarding the matters discussed in this e-mail.
John Coppola
July 7, 2014
Disclaimer: This communication is for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to purchase any interest in any investment vehicles managed by Client First Advisors, LLC or an associated person or entity. Client First Advisors does not accept any responsibility or liability arising from the use of this communication. No representation is being made that the information presented is accurate, current or complete, and such information is at all times subject to change without notice. Opinions expressed may differ or be contrary to the opinions and recommendations of Client First Advisors. Client First Advisors does not provide legal, accounting or tax advice. Any statement regarding legal, accounting or tax matters was written in connection with the explanation of the matters described herein and was not intended or written to be relied upon by any person as definitive advice. Any discussion of U.S. tax matters contained within this communication is not intended to be used and cannot be used for the purpose of avoiding penalties that may be imposed under applicable Federal, state or local tax law or recommending to another party any transaction or matter addressed herein. Each person should seek advice based on its particular circumstances from independent legal, accounting, and tax advisors regarding the matters discussed in this e-mail.
