Of course, the market will always turn well before the economy does but that assumes that the worst of the bad news will be out in the relatively near future. Meanwhile, the Fed and the media are still loathe to admit that we're in a recession. And the market wants to believe it too. My point is that while the market has rallied, it may not signal a major turning point as the worst of the economic news may be just beginning. Friday brings release of the long-awaited first quarter GDP data.
Expectations are for weak numbers, but still for a small increase in output.
Any surprises to the downside on this data are likely to hammer the life out of the recent rally and put a major damper on the unbridled enthusiasm seen in recent weeks. Market sentiment has definitely shifted to the optimistic side, but this report has the potential to rain on that parade. Fortunately, subscribers to The Sovereign Strategist have been taking advantage of that. But inflation is a possible consideration. Amid low interest rates the money supply has been shooting higher.