Wednesday, March 18, 2009

Signs of vibrancy

Now, after months of seemingly nonstop bad news, there are hopeful signs on the horizon. Below the surface of gloom, there are signs of a new vibrancy. They include:

  • A broad rally in stocks, confirmed last Thursday, continuing into this week and led by the beaten-down financials.
  • A surprising 22% surge in February housing starts to a seasonally adjusted annual rate of 583,000 units.
  • A back-to-back jump in retail sales ex autos, in both January and February.
  • A return to profitability at several major banks, including Citigroup, Bank of America and JPMorgan.
  • A doubling in the obscure but important Baltic Dry Index, a key indicator of global trade flows.
  • An upwardly sloping yield curve, which Fed research suggests all but ensures a rebound by year-end.
  • A Housing Affordability Index that has hit an all-time high.
  • A two-month improvement in wholesale used-car prices, measured by the Manheim Index.
  • A rise in Monster's Employment Index in February, suggesting a turn in the job market may be around the corner.
  • A 4 1/2-year high in the dollar against other major currencies, on a trade-weighted basis.
  • A sharp increase in the money supply, as measured by M2 and M1. Weekly M2 growth has averaged 10.1% year-over-year since the start of 2009, while M1 has grown at a 14.6% rate.
  • A two-month rally in the Index of Leading Indicators.
  • A growing body of evidence that the "liquidity crunch" is dead. Data show nearly $14 trillion in liquidity on the sidelines of the markets, ready to boost consumer spending, credit growth or further stock market gains.
Data Source: IBD Editorial

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