The Week ahead

Bump in the Turnaround

Last weeks GDP figures indicate quite clearly that the sky is not falling in the economy. True there has been an inventory correction and growth is much slower than it needs to be to pick of the stock market. There are signs that the worst is over, both for the economy and the stock market.

The economies 2% rate of gain during the first quarter represents an acceleration from the prior quarter. It shows that in spite of specific problems with manufacturing and high technology that the economy continues to hum along.

There is still a shortage of workers in the technology industry. Workers at Lucent for example are receiving job offers and leaving before even finding out if they are on the hit list.

Now that earnings season is over, the markets are more likely to respond to forward looking economic data. That and a series of stock buybacks should make for the market to make for its next milestone.

Though I think it may be three to five years before the NASDAQ market hits 5000, the chances of it hitting 2500 to 3000 in the next few months are excellent. The worst is over on the corporate profit front. Finally, the deceased cost of borrowing will begin to show itself on balance sheets across corporate America.

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Shmuel Protter
investmenttool.com