Is the bull market, which started after the lows of early 2009, coming to an end? Let’s have a look at some data, as well as the arguments pro and con, to see if we can find any insight. In particular, I want to look at the latest economic, corporate and market issues to see what we might learn.
First, the U.S. economy. As we have observed, it has been a long slog out of the depths of the financial crisis. Gross domestic product growth has never really taken off; wage growth is weak; and retail sales, except where cheap credit flows freely, have disappointed. Many people have little or negative equity in their homes. I have explained — or if you prefer, rationalized — that this is typical of other post-credit-crisis recoveries.
The primary upside to the U.S. economy has been job creation, housing and demand for capital.
Start with the recovery in the labor market. Unemployment now is 5.3 percent, almost half of what it was in the aftermath of the crisis; 11 million jobs have been created since the Great Recession ended. Job openings continue to increase, and there are signs that wages may finally begin to move higher. This is significantly better than it has been at any time since 2007.
Second, housing has improved. It is still below where it should be under normal circumstances, but as we have noted, these are not normal circumstances. Aided by low inventory (courtesy of the aforementioned equity issues) and cheap mortgage rates (courtesy of the Federal Reserve), prices are rebounding. We are also seeing building permits rise, and bidding wars for both buyers and renters are not uncommon. In select coastal and urban areas, there are definite supply shortages. Despite this lumpy and unevenly distributed improvement, the housing recovery is occurring.
Last, and perhaps most meaningful . . .
Continues here: Is the Bull Market Over?