NEW YORK--(BUSINESS WIRE)--The stock market has been falling for the past month with the Dow shedding about 5%. Selling has been due to weaker economic data, the Japanese earthquake and debt problems in the Eurozone. According to John Thomas Chief Economist Mike Norman, “More than likely this is a soft patch similar to what we saw last summer and nothing more.”
“We believe that investors should maintain a bullish posture because the Fed is likely to stay highly accommodative on monetary policy,” he said. “Bond yields have in fact been falling as a reflection of that expectation. On a macro level, households and businesses remain in much better financial shape than two years ago. For example, the Fed’s Financial Obligation Ratio, which measures monthly debt service burdens as a percentage of disposable income, is at the lowest level in 16 years. The magnitude of the debt correction is coincident with other periods that preceded strong economic upturns. In addition, corporations flush with record amounts of cash and corporate profits, while possibly due to correct, are still coming off record levels.”
“Finally, much of the concern revolves around the debt problems in the Eurozone,” he said. “We feel these fears are overblown and expect that the ECB will continue funding national deficits even though it is ideologically opposed to this. As such we consider the likelihood of default as low.
History has shown that investors who buy into panic end up being big winners. This time should be no different.”
About Mike Norman
Mike Norman is an economist and trader whose career spans over 30 years on Wall Street. He is a sought after TV commentator and has been seen regularly on CNBC, Bloomberg and Fox News. In 2003 he signed with Fox News as an exclusive Contributor and continues to appear on a regular basis on the Fox Business programs. Mr. Norman is an expert on fiscal and monetary policy and has created a unique indicator called the Fiscal Liquidity Index that looks at government spending and its impact on the financial markets. The Index is published daily and is carried on the Bloomberg system.
About John Thomas Financial
John Thomas Financial is an independent broker dealer and investment banking firm headquartered in New York City's Wall Street district. The firm was founded by Thomas Belesis, its current CEO, in 2007. Initially a three-person brokerage, it has grown to nearly 200 representatives and staff providing a range of retail brokerage, investment banking and corporate advisory services. It most recently added a private wealth management affiliate.
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