June 1, 2007

YET ANOTHER RECORD HIGH FOR STOCKS: I credit the Democratic Congress! Well, that and good economic news:

Investors found reason for optimism in a stronger-than-expected jobs report for May. Nonfarm payrolls rose by 157,000 last month, a larger increase than in April and more than analysts anticipated. The unemployment rate held steady at 4.5 percent, as forecast, according to the Labor Department report.

The economic picture appeared brighter still following a lower reading on inflation from the Commerce Department and data from the Institute for Supply Management’s May survey, which indicated that the manufacturing sector was strengthening.

Well, that all sounds good.

UPDATE: A reader emails:

It is not only the U.S. where stocks are hitting records highs but also most markets in Europe, Asia, Africa and South America too. Lost amongst the cacophony of the MSM is the fact that economically the world has never had it this good and as a result millons of people are being lifted out of abject poverty every year.

I am employed as an emerging markets fund manager and witness this first hand. Two weeks ago I was in Shanghai and had dinner at a restaurant called M on the Bund. The Bund is where the banks and trading houses built their headquarters during the last great boom in Shanghai in the 1920’s & 30’s. M has a roof terrace overlooking the Hangpu River which is the main waterway for the city. The whole evening I witnessed a procession of barges and other ships laden with coal, cement, oil etc. heading upstream full and downstream empty. Looking out I could see the lights of welders flicker from various construction sites (sites are active 24/7) throughout the city. Scenes like these are occuring throughout the developing world though most without the vigor of the Chinese. As a result the various local economies are booming as are their stock markets. It is interesting to note that the two areas where the markets aren’t hitting new highs are Russia and the Gulf. I wonder if that tells us something about the future direction of oil prices?

That’s interesting. It probably tells us more about the corrosive effect of bad governance.

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