Global "Green Shoot" Explosion
The MSCI World Stock Market Index continued its six-month rally and reached a new 11-month high on Friday of 1119.23, the highest close since October 3 last year. From the March low, world stocks have now risen by 62.5% (see chart above).
Yesterday's (Saturday) Wall Street Journal was full of stories about positive economic news here and around the world, here's a sample below. Pretty amazing for so much positive news of economic "green shoots" in just a single issue of the WSJ (the last story below was from Friday).
1. Brazil Exits Recession in 1.9% Lift. Brazil pulled itself out of recession in the second quarter with strong performances by its industrial and service sectors. Gross domestic product expanded 1.9% in the second quarter compared with the first period, the Brazilian Census Bureau, or IBGE, said Friday.
2. OECD Data Point to Broad Economic Recovery. There are increasingly strong indications that the world economy is on the path to recovery, with both the leading developed and the leading developing economies emerging from a downturn, according to figures released Friday by the OECD.
3. China Industrial Output Rises, Bank Lending Picks Up. The Chinese economy continued to recover in August, official data showed Friday, as the expansion in industry accelerated and bank lending picked up.
4. Economic Confidence Rebounds. Economists and consumers [in the U.S.] are feeling better about the economy a year after the most frightening moments of the financial crisis.
5. Volkswagen to Boost Production in China. Volkswagen AG said Friday it will invest $5.83 billion in increasing production and capacity in China by 2011 in a bid to keep pace with soaring demand.
6. "Fear Gauge" Is Showing Far Less of It. The stock market's "fear gauge" registered a 52-week low Friday, nearly a year after the market sank in the wake of Lehman Brothers' collapse. The Chicago Board Options Exchange's volatility index (VIX) hit as low as 22.5 before closing at 24.2, up 2.6% from Thursday.
7. FedEx Raises Outlook, Stokes Hopes for Recovery. FedEx raised its earnings expectations in a further sign that the global economy is stabilizing, citing a recovery in international markets. The package-delivery giant is a bellwether for economic activity.
8. Is the Recession Over? Wait Until 2010 for NBER’s Answer. The economy is pulling out of its downturn, but don’t expect an end-of-recession declaration anytime soon from the National Bureau of Economic Research. One member of its Business Cycle Dating Committee, Northwestern University economist Robert Gordon, said he believes June will mark the trough for the recession that started in December 2007 (MP: In that case, we are now in the third month of an economic expansion). But he expects the NBER’s recession-dating panel to wait six to eight more months before voting on an end date to ensure the economy doesn’t experience a double-dip recession.