So what if the economy has not performed as well as leading indicators has shown?
The pundits’ obsession towards certain stocks is remarkable, to say the least. Their last chance to maintain any reliability to their viewership is a less than spectacular economic data this week that will prove their long-term bearish scenarios.
But stock market investing in the past few days of the upward break from the trading range of the past few months is mostly a function of reality, it’s no longer perception. And the reality is the firm’s decisions in these uncertain times have proven corporate management’s strong ability to maintain profitability regardless of the unfavorable environment.
And these decisions affect corporate results in a big way. We are talking about conditions that are changing the rules of the game….
So what happens if the economic figures released in the next few days turn out not backing up this bullish notion? Will the markets be able to sustain the upward momentum?
Unlike the pundits, I don't claim to know how well the U.S. economy has actually performed. There is no way one can gauge how the very low sentiment during the quarter affected actual economic activity.
What I do know, however, is that worse than expected economic data will only prove how well firms can adapt to the changing economic conditions, and how they are able to control costs while maintaining revenue growth. In other words, I believe the stock market will outperform regardless of any potential shortfallings in the economy.
The bottom line is that while the data might actually not be as robust as us bulls expect them to be, I believe the strong corporate profit margins and earnings show their potential to remain on a much higher plateau than historical figures and will prove how much more immune they are to any potential sour spots in the economic curve…