Overseas demand appears to be driving the nation’s current bull market, Bloomberg News reports. Leading the way are China, whose economy expanded at an annual rate of 11.1 percent in the first quarter, and Germany, the largest economy in Europe.
Companies in Standard & Poor’s 500 Index now get 49 percent of their revenue from buyers from outside the United States, S&P says, compared with 48.6 percent last year and 30 percent in 2001. That has helped fuel earnings that in the first quarter rose three times faster than analyst expectations.
“I can’t get bearish,” Barton Biggs, who runs the $1.84 billion Traxis Partners LLC hedge fund in New York, told Bloomberg. That’s saying a lot for the economist who notoriously dressed in a bear suit in 1993 to appear on the cover of Forbes predicting the 2001 recession. He predicts the S&P 500 will increase 15 percent this year and the Dow Jones Industrial Average will gain as much as 19 percent.
The S&P 500 last week reached 1,505.62 points, an increase of 6.2 percent this year and just 1.4 percent below the the record 1,527.46 reached on March 24, 2000. The 30-stock Dow closed at an all-time high four times in five trading days as it rose 1.1 percent for the week to 13,264.62.
“To the extent that the U.S. is slowing, other economies are accelerating,” Biggs said. Goldman Sachs Group Inc. last week predicted the world economy will expand by 4.2 percent this year while the U.S. economy increases 2.1 percent and issued “buy” recommendations for 34 firms that draw at least 65 percent of their revenue from abroad.
“Some key European economies are starting to grow quite a bit,” noted Mauro Guillen, director of the Lauder Institute at the University of Pennsylvania’s Wharton School. Pair that expansion with the dollar’s current all-time low, and “it has a large impact.”
