Manley on the Street

“What, me worry?” —Alfred E. Neuman, Mad Magazine

I think stocks may decline. I think interest rates may rise. I am not alone.

For the past several weeks, my mailbox has been inundated with calls for a correction. These are calls from reputable people who possess common sense and have a history of thoughtful predictions. They are not the letter-writing lunatic fringe who constantly perch on mountaintops or lounge on beaches, waiting for the end of life as we know it. These people and their opinions deserve respect.

Those calling for a correction are right about the direction but not so much the degree. I believe that the U.S. economy is improving and that improved conditions will soon allow Federal Reserve (Fed) Chair Janet Yellen to raise short-term interest rates. Chair Yellen is now alerting us to that possibility/probability. To me, this is an indication that she believes that the economy has improved enough to allow the Fed to raise rates without adversely affecting economic activity.

Manley on the Street

 “I can’t tell you how encouraging a thing like this is.” —Ruth Gordon (on accepting the 1969 Academy Award for best supporting actress at the age of 72, after 50 years in show business)

“Time flies when you’re having fun.”

The current bull market in equities has been going on for some time now, and some think that it’s beginning to show its age. In March 2009, the S&P 500 Index almost touched 666 points. In the summer of 2011, it came close to a 20% correction but, on a closing basis, not quite. Since then, there have been a number of micro-panics but only one 10-percenter and nothing close to a 20% correction. So, depending on how much of a purist you are on these things, we are either five- or six-and-a-half years into what’s been, so far, a pretty spectacular rise in stocks.