Stocks have rallied in September. This morning the market is up due to the following:
- The Commerce Department reported that orders for durable goods excluding transportation rose last month at their fastest pace in five months. The increase was double what economists polled by Thomson Reuters had expected. The manufacturing sector has expanded for 13 straight months, as measured by the Institute for Supply Management. Capital goods, which excludes transportation and defense goods, are seen as a good proxy for business and economists watch it closely.
- U.S. companies invested last month in computers, communications equipment and machinery, boosting capital goods orders for the third time in four months. Business spending on equipment and software has been growing at a 20 percent annual rate over the past three quarters.
- A surprise jump in business confidence in Germany also tempered worries about Europe’s economy driving stocks higher in Europe. Read more
Warren Buffett was one of the notable business leaders who either spoke at or attended the Montana Economic Development summit earlier this week. Mr. Buffett stated that he is very bullish on the U.S., and it would not experience a double-dip recession. Echoing Mr. Buffett’s comments was Jeff Immelt, CEO of General Electric, noting that things were getting better.
Supporting Mr. Buffett’s optimistic belief were announcements this week from the government that the threats of deflation and a second recession shrank as jobless claims fell and wholesale prices rose. Read more
Art Hogan, Global Equity Product Director at Jeffries Group, and Nouriel Roubini, Professor of economics at New York University’s Stern School of Business, and chairman of Roubini Global Economics an economics consulting firm, both appeared separately on CNBC today and offered very differing views on the U.S. economy.
Mr. Hogan stated that he, and other associates of his firm, has heard various corporate CEOs and CFOs they speak with state that there is no talk of a double dip recession, and the focus is on continued slow and steady improvement in their respective businesses, increased demand from their consumers and conditions getting incrementally better. His take is we are in a slow and steady recovery, and there is a huge stock pile of cash on global corporate balance sheets that will be eventually put to work once they seen improved conditions. Ironically, he noted that it is a chicken and the egg conundrum, corporations won’t put cash to work until they see continued economic improvement; however, these same corporations can be the catalyst for economic improvement by putting the cash to work via economic expansion and hiring.
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