Not too hot, Not too cold

by Laura Ehrenberg-Chesler on September 19, 2013

in Economic Indicators,equity market,inflation/deflation,interest rates,Investment Strategies

As a follow on to several of my blog posts over the past few months, I would once again make the argument that the market has the potential to continue its upward trajectory over the next few years.  It will most certainly not be a straight line up, but the trend could continue to the upside in the current environment of low inflation, slow and steady growth, relatively low interest rates, emerging energy independence, and a revitalized manufacturing sector.

From Ed Yardeni’s research report on Monday:

So slow economic growth that doesn’t build up too many excesses–such as inflation, borrowing binges, and speculative bubbles–is ideal for secular bulls.

 That’s more or less what we’ve had for the past four and a half years. If we are lucky, that could continue for another two to four years perhaps. At least that’s my current working hypothesis. As for the remainder of this year and next year, I’m sticking with my yearend target of 1665-1700 for the S&P 500. By the end of next year, I’m expecting to see 1800-2100.

We agree with Mr. Yardeni.  Not too hot, and not too cold should bode well for the stock market.


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