Remember the old folklore tale about the mighty John Henry, who hammered a tunnel through a mountain faster than his boss's new steam-powered drilling machine? Of course his victory was short lived because the feat cost him his life, but Big John was technically right.
And that's what I kept thinking about as we chatted with Marc Pado today. The U.S. market strategist at Cantor Fitzgerald is a self-proclaimed optimist who feels the pessimism has gone too far. Like many strategists who have been guests recently, Pado is expecting a "big second half rally" that will push the S&P 500 to 1,450.
And maybe he's right.
But the fact is, right now, many investors have lost faith in the markets, the economic recovery and, most of all, the flip-foppy Fed and its ever-changing forecast. No amount of forward analysis can soften the impact of a sell-off that, in a single day, has wiped out four days of heavy lifting by the bulls.
"I think, if anything, Ben Bernanke was optimistic on the second half," Pado argues, saying that, in order to get to 2.8 percent GDP on the year, we would need 3 percent-plus for the next two quarters.
"I think that's pretty good. I'll take that," Pado says. "I am a glass-half-full guy."
Remember when the White House adjusted the goal of stimulus spending to include "jobs created AND saved?"
Well, Marc Pado has done them one better and coined the calculus for "equivalent jobs," as in, the increase in productivity as measured by the hours worked per week over the past two years has created the equivalent of 2.8 million jobs. That would be nearly triple the number of old-fashioned actual jobs that have been added during that time.
Rounding out Pado's path through the mountain is a call for an uptick in share buyback announcements this quarter, as well as a stronger than normal seasonal pop in 4th quarter tech spending due to the "capital equipment expenditure allowance."
Add in a weaker dollar, Japanese reconstruction spending (instead of quake/tsunami clean up) and a defacto "tax break" in the form of cheaper oil and...voila...you're at 1,450 and you've beaten the steam drill just as you predicted.
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