So here we are on the one-year anniversary of a booming stock market -- the best in 75 years. That continues to tell me things are getting better in the American economy, and that the global economic story is improving.
Of course, I know that Washington is still going completely in the wrong direction. Instead of embracing free-market capitalism, it’s threatening to move toward statism, with its big-spending, over-regulating, high-taxing, and economy-controlling “eat-the-rich” cannibalization of successful investors and entrepreneurs.
So while Washington has run amok, I do believe that this great stock market rally over the past year -- the S&P 500 is up 68 percent and economy-sensitive small-caps are up 95 percent -- is in part telling us that political regime change is coming our way this November.
Lawmakers are selling a product that the rest of the country refuses to buy. The big-government march toward statism is under so much attack that it may be overthrown before it really takes hold. That’s the beauty of a free voting democracy like ours.
We the People are the best bulwark to maintain the kind of economic freedom that creates wealth, prosperity, and American exceptionalism. That’s why I can still find some optimism in this story.
Meanwhile, inside the economy, king profits are strong -- $80 a share on the S&P 500 is delivering a roughly 13 times multiple. That, along with a low Treasury bond rate of 3.7 percent, makes stocks look pretty attractive, at least for the short run. Profits remain the mother’s milk of stocks. So, combined with easy money from the Fed, I think stocks can run a bit here.
Another key point is King Dollar. The greenback is improving. The resulting world capital inflows may really help stocks.
Our mostly free-market economy, including the financial sector, is gradually healing. The optimistic mustard seeds that I saw being planted in the dark days of the autumn of 2008 are growing. Now, I know that my left-wing critics don’t like my optimism. But I’m sticking with it. Even with all the threats coming out of Washington.
America can beat these threats.