{"id":28043,"date":"2012-03-07T09:38:32","date_gmt":"2012-03-07T14:38:32","guid":{"rendered":"http:\/\/countingpips.com\/fx\/2012\/03\/07\/markets-point-to-economic-recovery-in-2012\/"},"modified":"2012-03-07T09:38:32","modified_gmt":"2012-03-07T14:38:32","slug":"markets-point-to-economic-recovery-in-2012","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2012\/03\/07\/markets-point-to-economic-recovery-in-2012\/","title":{"rendered":"Markets Point to Economic Recovery in 2012"},"content":{"rendered":"<div align=\"left\"><script type=\"text\/javascript\">\ntweetmeme_style = 'compact';\n<\/script><br \/>\n<script type=\"text\/javascript\" src=\"http:\/\/tweetmeme.com\/i\/scripts\/button.js\"><\/script>\n<\/div>\n<p>I\u2019m a glass half full kind of person. That\u2019s quite an accomplishment coming from my family, who not only believes the glass is half empty but that it\u2019s teetering on the edge of the counter and is about to get knocked to the floor and shatter into a million pieces. Then we\u2019ll have to wear shoes in the kitchen for a month, otherwise we\u2019ll get shards of glass impaled in our feet.<\/p>\n<p>Over the past year, while talking about the markets and the economy with my father, he\u2019d often skeptically ask the question \u2013 \u201cWhat\u2019s going to make the economy recover?\u201d<\/p>\n<p>My answer was always the same. \u201cI don\u2019t know what\u2019s going to cause it to recover, but the market is telling us it <em>is <\/em>going to recover.\u201d<\/p>\n<p>The markets are a forward-looking mechanism. They rise and fall a few months ahead of macro-economic trends.<\/p>\n<p>The market topped in October 2007. The Great Recession officially began in December of that year. Similarly, the market hit a bottom in March 2009. <a title=\"The End of the Recession: A New Indicator Predicts With Startling Accuracy\" href=\"http:\/\/www.investmentu.com\/2009\/May\/the-end-of-the-recession.html\">The recession formally ended<\/a> three months later.<\/p>\n<p>There are still plenty of nattering nabobs of negativism out there who refuse to look at the data and admit things are getting better, often because of a political or economic agenda.<\/p>\n<p>They\u2019ll point to <a title=\"Unemployment Numbers \u2013 Fake, or Really, Really Fake?\" href=\"http:\/\/www.investmentu.com\/2009\/June\/unemployment-numbers.html\">unemployment<\/a> at a still-too-high 8.3% (although it\u2019s down from over 9%) and ignore things like:<\/p>\n<ul>\n<li>The four-week moving average of jobless claims is at its lowest level since March 2008.<\/li>\n<li>Consumer confidence is at its highest point in over a year.<\/li>\n<li>Tax revenue in many cities and states is higher than expected.<\/li>\n<li>The Non-Manufacturing Business Activity Index rose for the thirty-first consecutive month and climbed 3.1 percentage points in February. The New Orders Index increased 1.8 percentage points and the Price Index grew 4.9 percentage points.<\/li>\n<\/ul>\n<p>Still not convinced the economy is rebounding?<\/p>\n<p>Earnings for S&amp;P 500 companies were not only up 10% last year, they were <em>record <\/em>profits for the second year in a row.<\/p>\n<p>And although the market is clearly in a bull phase, P\/E ratios have actually come down as stock prices have not kept up with earnings growth.<\/p>\n<p>According to Bespoke Investment Group, the 14.1 P\/E ratio of the S&amp;P 500 is below the prior high (of this bull market) of 15.6, back in April \u2013 despite earnings growing at a double-digit clip.<\/p>\n<p>P\/E ratios in energy and materials companies have gone down the most, presenting investors with some interesting opportunities.<\/p>\n<p>For example, <strong>Williams Partners<\/strong> (NYSE: <a href=\"http:\/\/www.google.com\/finance?q=WPZ\" target=\"_blank\">WPZ<\/a>), a MLP that\u2019s currently in <em>The<\/em> <em>Ultimate Income Letter\u2019s<\/em> Perpetual Income Portfolio, has seen its P\/E ratio fall from 17.5 in 2010 to 16.3 at the end of 2011, down to 14.0 today, despite the stock price advancing 31% since the end of 2010.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-27952\" title=\"Williams Energy Partners P\/E\" src=\"http:\/\/www.investmentu.com\/wp-content\/uploads\/2012\/03\/economic-recovery-2012.jpg\" alt=\"Economic Recovery in 2012\" width=\"511\" height=\"343\" \/><\/p>\n<p>Also, interesting to note that despite a three-year bull market, <a title=\"Investor Sentiment Indicators: Ominous Optimism\" href=\"http:\/\/www.investmentu.com\/2004\/December\/20041230.html\">investor sentiment<\/a> is still negative. According to the American Association of Individual Investors, only 44.5% of investors are bullish.<\/p>\n<p>So, what are the markets telling us now?<\/p>\n<p>You know that we don\u2019t try to time the market here at <em><a href=\"http:\/\/oxfordclub.com\/video\/iu\/IUPvideo.php?code=WIUPMA05&amp;n=IUP\" target=\"_blank\">Investment U<\/a><\/em> or <em><a href=\"http:\/\/oxfordclub.com\/video\/oxf\/OCSP0212.php?code=WIUPMA05&amp;n=IUP\" target=\"_blank\">The Oxford Club<\/a><\/em>. But the fact that the stock market is still climbing, earnings are growing and sentiment is not yet bullish, makes me think this bull still has some legs. And, just as importantly, that the economy will continue to improve.<\/p>\n<p>When sentiment gets significantly more bullish and the market and earnings turn lower, that\u2019s when I\u2019ll start to grow concerned.<\/p>\n<p>We still have serious problems in the country that need to be addressed. But for now, the market is indicating that <a title=\"The Coming Economic Collapse That Never Was\" href=\"http:\/\/www.investmentu.com\/2012\/March\/the-coming-economic-collapse.html\">the sky isn\u2019t falling<\/a>. In fact, it\u2019s looking clearer every day.<\/p>\n<p>Good Investing,<\/p>\n<p>Marc Lichtenfeld<\/p>\n<p>[<strong>Editor\u2019s Note:<\/strong> Marc originally recommended WPZ in September of 2011. Since then it\u2019s up over 15% plus a dividend yield of about 5.5%.<\/p>\n<p>But Marc also recommended another stock on the same day that\u2019s up almost 30% plus a 4% dividend yield. And this stock\u2019s P\/E is <em><span>still<\/span><\/em> lower than WPZ.<\/p>\n<p>To find out how to get \u201cin the know\u201d with this stock and many more, <a href=\"http:\/\/oxfordclub.com\/video\/iu\/IUPvideo.php?code=WIUPMA05&amp;n=IUP\" target=\"_blank\">click here<\/a>.]<\/p>\n<div>\n<a href=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?a=UPmUuyBLsDk:zHVkFn2Lc-8:yIl2AUoC8zA\"><img decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?d=yIl2AUoC8zA\" border=\"0\"><\/img><\/a> <a href=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?a=UPmUuyBLsDk:zHVkFn2Lc-8:V_sGLiPBpWU\"><img decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?i=UPmUuyBLsDk:zHVkFn2Lc-8:V_sGLiPBpWU\" border=\"0\"><\/img><\/a> <a href=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?a=UPmUuyBLsDk:zHVkFn2Lc-8:qj6IDK7rITs\"><img decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?d=qj6IDK7rITs\" border=\"0\"><\/img><\/a> <a href=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?a=UPmUuyBLsDk:zHVkFn2Lc-8:gIN9vFwOqvQ\"><img decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?i=UPmUuyBLsDk:zHVkFn2Lc-8:gIN9vFwOqvQ\" border=\"0\"><\/img><\/a> <a href=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?a=UPmUuyBLsDk:zHVkFn2Lc-8:F7zBnMyn0Lo\"><img decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?i=UPmUuyBLsDk:zHVkFn2Lc-8:F7zBnMyn0Lo\" border=\"0\"><\/img><\/a>\n<\/div>\n<p><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~r\/InvestmentU\/~4\/UPmUuyBLsDk\" height=\"1\" width=\"1\" \/><\/p>\n<p>Article by <a href=\"http:\/\/www.investmentu.com\/\" target=\"_blank\">Investment U<\/a> <\/p>\n","protected":false},"excerpt":{"rendered":"<p>I\u2019m a glass half full kind of person. That\u2019s quite an accomplishment coming from my family, who not only believes the glass is half empty but that it\u2019s teetering on the edge of the counter and is about to get knocked to the floor and shatter into a million pieces. Then we\u2019ll have to wear &hellip; <\/p>\n<p class=\"link-more\"><a href=\"https:\/\/www.investmacro.com\/fx\/2012\/03\/07\/markets-point-to-economic-recovery-in-2012\/\" class=\"more-link\">Continue reading<span class=\"screen-reader-text\"> &#8220;Markets Point to Economic Recovery in 2012&#8221;<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-28043","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/28043","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/comments?post=28043"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/28043\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/media?parent=28043"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/categories?post=28043"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/tags?post=28043"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}