Like the skull-crushing noise in a German techno club, the drumbeat of negatives emanating from Europe is drowning out what should be music to the stock market's ears: Our domestic economic situation is improving at a sluggish, yet undeniable pace.
A man less given to disco metaphors, Jim Paulsen of Wells Capital Management says the U.S. is starting to put together a "pretty convincing reacceleration story in the U.S. economy." He cites shrinking jobless claims, rising ISM, improving consumer confidence and spending and believes there's a large and growing disconnect between what we think may happen and what's right in front of our face.
The chief investment strategist says something has to give; either the long-awaited European "explosion" happens or bears need to accept the reality of a U.S. recovery. The genial Minnesotan compares the tension between the two views to "stretching the rubber band," suggesting either the bulls or bears are about to receive a painful jolt.
Comparing the current setup to that of the early 1990's when Japan began its three-decade and counting slide into economic oblivion, Paulsen says only a complete disaster in Europe would threaten the global recovery. A slowdown or recession across the pond, one we're likely already experiencing, isn't enough to take down the U.S. However, fullblown banking contagion would be a "game-ender."Read More »from Invest While You Worry: Jim Paulsen