A roster of financial-market heavy hitters have come out in
recent days waving their bullish flags and hailing the virtues of
buying into U.S. equities right now, as the stock market dances
around record-high levels, and the overall economy shows signs of
The rhetoric has been loud and clear, with the likes of banking
analyst Meredith Whitney, who became a household name after
predicting Citigroup's troubles before the financial crisis in
2008, quoted by CNBC as saying she has never been "this bullish on
the U.S., on equities" in her entire career.
Her strong language came just a day after Morgan Stanley's U.S.
equity strategist and noted bear Adam Parker revised his
projections for the S&P 500 in a research note, raising his
2013 target to 1,600 from his previous November-released estimate
of 1,434 by year-end. It closed on Tuesday at 1,538.34.
The two of them, and others such as Deutsche Bank's David Bianco
and Goldman Sachs' David Kostin-all known for their
less-than-bullish views on the markets, as the Wall Street Journal
noted Tuesday-are now part of what seems like a growing club of
strategists who see the U.S. stock market as a super-safe bet given
many of the uncertainties still in the global economy, most
recently problems in Cyprus.
So far, ETF investors seem to be listening. In the month of
February, they poured more than $3.70 billion into U.S. equities
and have added another $9.4 billion into the segment in the first
two weeks of March alone, according to data compiled by
The massive inflows have helped propel total U.S.-listed ETF
assets, along with market action, to unprecedented levels hovering
around $1.45 trillion-and U.S. equities ETFs now snag nearly half
of that total.
The inflows came as the Dow Jones industrial average raced to
record level after record level for 10 days straight, while the
S&P 500 last week came within roughly 2 points of its
still-unmatched 2007 record high closing. The $12.5 billion SPDR
Dow Jones Industrial Average ETF (NYSEArca:DIA), tracking the Dow,
also climbed to brand new highs, closing one day last week at
$145.33 a share, its highest closing strike ever, while the $127.7
billion SPDR S&P 500 ETF (NYSEArca:SPY) forged new highs.
The fundamental backdrop seems to point to an improving economy
if the latest round of economic data is any indication. Dropping
unemployment rates, recovering housing values, strong retail sales
and measured inflation targets all are adding fodder to the
perception that the worst of the 2008 financial crisis might be in
the rearview mirror.
A quick look at a chart will show that since the Dow bottomed at
6,547.05 on March 9, 2009, at the height of the U.S. credit crisis,
it has climbed nearly 8,000 points, or some 122 percent to forge a
new record-high closing of 14,539.14 last week on March 14, roughly
four years later.
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