The U.S. has a dysfunctional government, people around the country have given up looking for work, and the economy is barely growing. So why does the stock market keep going higher? For quite some time, Jeffrey Saut, Chief Investment Strategist for Raymond James, has been saying that the answer to this question is obvious, and one investors still can’t accept: “We’re in a [long-term] secular bull market and in secular bull markets all surprises tend to come on the upside,” he recently told Financial Sense Newshour.
In a fascinating interview with Jim Puplava, Saut explained one of the major reasons why the average investing public is often out of sync with the stock market: The “equity markets do not care about the absolutes of good or bad. All the equity markets care about is are things getting better or are things getter worse, and I think things are getting better.”
However, many seem to disagree with this notion, and say that the stock market isn’t actually rising because the economy is getting better, but largely because of a “crazy, maniacal policy” of printing money by the Fed, as noted columnist and short-seller Bill Fleckenstein stated in a recent interview.
When asked whether it really is all about the Fed driving stocks higher, Saut disagreed and said, “It’s not just about the liquidity in the system that the Fed has pumped in. Sure, that’s been helpful and, sure, with interest rates you can’t get the kind of returns you need out of the fixed income complex, but earnings have almost tripled since 2008…so things are going right.”
Saut went on to explain how those citing Fed liquidity as the only driver of U.S. stocks are failing to recognize a much larger and unstoppable trend: an “American industrial renaissance.”
“Motorola Mobility is bringing two thousand jobs to Texas. BMW is expanding their plant to the tune of $900 million north of Greenville, South Carolina. Airbus broke ground seven or eight months ago in Mobile [Alabama] to build a $600 million plant to build the Airbus 319 and 320’s. So I think…the American industrial renaissance is a very powerful trend. I think [a move towards] energy independence is a very powerful trend. I don’t think they’re stoppable. I think they will gain traction going forward.”
Question is how long does Raymond James’ Chief Investment Strategist think this can go on? By taking a certainly optimistic view of America’s long-term fortunes, and helping to explain why he believes we are in a long-term bull market, Jeffrey Saut projected “pretty powerful economic growth going forward over the next ten years,” since, he noted, the U.S. has now added Saudi Arabia on top of its industrial might with shale energy.
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Audio link: https://www.financialsense.com/financial-sense-newshour/jeffrey-saut/sti...
