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The Reformed Broker

Are we poised for an economic explosion?

Going into the end of the year, there's a debt deal in the works, no tapering in sight, and a slew of other economic indicators are turning positive. Will the economy skyrocket?

By Guest blogger / October 17, 2013

Trader Edward Curran, left, and F. Hill Creekmore works on the floor of the New York Stock Exchange Thursday, Oct. 17, 2013.

Richard Drew/AP

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Let me set the scene for you:

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Joshua has been managing money for high net worth clients, charitable foundations, corporations and retirement plans for more than a decade.

Recent posts

* There is a Debt Deal in the works that removes the ceiling and related draconian cuts from the discussion til at least February. Out of sight, out of mind.

* There is no election this fall.

* There is no war with Syria and high level talks are happening with Iran for the first time in decades.

* The incoming Fed Chairperson is the most dovish in the institution's 100 year history. There will be no taper talk whatsoever so long as employment data remains muted. At least not this quarter and probably not until the spring barring a huge tsunami of good economic data.

* Stock markets around the world are selling at fair to absurdly cheap valuations.

* The banks are as highly capitalized as they have ever been.

* Home prices are back to long-term trend and appreciation continues despite recent mortgage slowdown -normalization being the operative word.

* US households reclaimed the 2007 peak in total net worth and have now surpassed it.

* Small and mid cap stocks are at all-time highs and yet still under-owned by the largest pools of capital in the US - pensions, endowments and insurance companies.

* Going back 110 years, when the Dow has been up in the first half, it's finished the year strong with gains in the back half 70% of the time.

* Hedge funds are at their highest net short positions since January and have massively trailed every equity benchmark you can think of.

Thats the set-up going into year-end.

What happens from here?  My guess would be that we have all the rocket fuel we need for an explosion.

Your thoughts?

The Christian Science Monitor has assembled a diverse group of the best economy-related bloggers out there. Our guest bloggers are not employed or directed by the Monitor and the views expressed are the bloggers' own, as is responsibility for the content of their blogs. To contact us about a blogger, click here.To add or view a comment on a guest blog, please go to the blogger's own site by clicking on www.thereformedbroker.com.

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