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Ten Things That Would Incite Bullishness

30 July 2010 No Comment

Great article at ZH on known-bear David Rosenberg – he lists ten things that would make him bullish on the economy.  This is a good article since it shows Rosenberg isn’t a “perma-bear” but just a bear based on the current fundamentals.  Check out the list of ten things:

I was recently asked to provide a list of developments that would make me more bullish on the macro and market outlook. Here are a few:

1. Initial jobless claims below 400k on a sustained basis. This would lead to job growth strong enough to generate organic wage growth.

2. Improvement in housing inventories to a 5-6 months’ supply backdrop. This would help establish a floor under home prices.

3. Signs of a turnaround in the money multiplier, money velocity and the ratio of commercial bank non-liquid assets/total assets. Any sign that the debt deleveraging cycle has run its course.

4. A new “killer app” or some major technological breakthrough would be nice.

5. A sustained decline in oil prices that is induced by new supplies (or peace in the Mideast?) as opposed to demand destruction would act as a de facto tax cut.

6. Structural economic reforms in the world’s “surplus saving” countries like China, India and Germany that stimulate their domestic demand, and hence bolster our exports and reduce the global reliance on the U.S. as the consumer of last resort, would be a huge plus.

7. A peaking out in the personal savings rate (the sooner we get to 6%-8%, the better) – get to a level consistent with pent-up demand.

8. Consumer confidence closer to 100 (typical of expansion) than the current 50 reading.

9. An end to the steep cutbacks at the state and local government level.

10. New and more effective political leadership globally – could the Cameron victory in the UK be a leading indicator towards fiscal probity?

How many of these things do you see coming in the near future?

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