The 3rd quarter earnings report of most of the reporting companies in the S&P 500 beat analysts’ estimates. This is due to a combination of higher sales due to more consumer spending and reduction of expenses because companies have become more efficient. This combination of more revenue and less expenses is giving many companies a healthy cash flow that should find its way into capital investments and stock purchase.
What is fueling consumer spending? It seems that Americans are resigned to a Hillary Clinton presidency and they think it won’t be so bad. There also has not been any terrible news lately. In addition to the good earnings reports, oil is holding at about $50 per barrel and copper price has been hovering around $2 per pound. The doom sayers are wrong again about the big stock market crash that they predicted would happen before the U.S. presidential elections. The BIG CRASH will happen but it will not be before November 8. Folks, it may not even happen until 2018. I see the road to the next recession as a slow bleed not a heart attack. We are due for a 10-20% correction since the last correction was in the middle of February this year. We will discuss this on the next blog. Stand by.