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The Mortgage Real Estate Boom Helps Push The Stock Market Further - Get With The
By Armand Glans
The real estate boom the last 5-7 years have been helping out the stock market when it comes to willingness to consume. I will come back to this further on and give the background for what can to be called the driven economy.
The GDP numbers was weak for the first quarter, especially in the US where the GDP was down to 0,6% from 2,5%. The first quarter was globally rather weak with the exception of China where the GDP numbers was moving up to 11,1% from 10,4% which is extreme but seems at this stage to endure. Worth being noticed is that the important US private consumption, that stands for 70% of the total GDP growth, was up 4,4% compared to the first estimate of 3,8%. The housing market have though been weak and there is also in the housing market where the risks are if the private consumers can keep on holding up the US economy and help US getting there soft landing.
Other aspects when it comes to consuming is that Asia and Europe seems to be taking on a lot of the burden of holding up the global growth and Japan is in there longest phase of expansion since the Second World War. The Japanese private consumers was stronger than expected with a 1,1% up, expected 0,2%, which is a important issue to move Japan out of there long period of deflation.
The first quarter was weak, even weaker than expected though the expectations were rather low beforehand. This fact have been holding back the market the second quarter but at this stage the market feels safe to move on and trust the US consumers and the FED to do the right thing.
To be considered at this stage is to look back to be able to look forward. The combination of decreasing interest’s world wide and the increasing real estate prices have for the last couple of years helping consumers push the growth further by consume as been never seen before. Consumers have the last couple of years step by step moving up there levels of housing and used the money to increase there wealth. When housing prices in the US and most parts of Europe at this stage been coming back the consumers need help to not be losing there willingness to consume. The help must be coming from the company sector.
After the recession in the 21st century the companies cut there mortgage levels down to historical very low levels and almost stop investing though consumers started to consume. With the start of this century in mind companies have not be willing to turn on the investments though the interest decreasing and the consumers started to spend there
money. What is starting to be seen in the last couple of years is that companies is step by step moving up and start hiring and investing again and this is a good sign to increase the probability to help the global economy to going in to the supercycle where Asia and Europe is taking on the burden of the weakening of the US economy.
If the assumption above is correct we will see at least another year with the stock market strengthen up and moving on even more. There is though scepticism out there in the market which is good because a market moving up during scepticism is a good thing when capital is still standing outside of the market.
So what is important being seen in the end of 2007 is that companies is moving up there mortgages and start investing there capital gathered in the last couple of years. This will help the consumers being safe consuming and push the global economy further. Article Source: http://www.articles-galore.com Armand Glans works as a stock broker, and is writing about the global economy, investing, mortgages and real estate inm his financial stock broker blog, fully monetized by the use of contextual ads and a mortgage affiliate program.
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