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7 Reasons the Bulls to Run in March

With all the talk about debt, deficits and value destruction in the news lately, I figured you could stand to hear something positive for a change. So with thanks to the analysts at ISI Group in New York, here are some strengths in the U.S. and global economy to put into your mix of thoughts:

7. The Recovery Is Just Getting Started: The past nine economic expansions have lasted 62 months on average. We are probably now in only the eighth month of the current expansion. (An expansion starts when a recession ends.)

6. We Have Years of Growth Ahead: The last expansion, from late 2002 to mid-2007, was 73 months, or slightly longer than average. Other recent expansions included 120 months (1991-2000); 1983-1990 (92 months); 1980-81 (12 months); 1975-1979 (58 months); 1971-1973 (36 months); 1961-1969 (106 months). So you can see, most are multiyear affairs.

5. Yes, the Labor Market Is Improving: Unemployment may be stagnant, but on a trailing 12-month average basis, it is improving quite a bit, which is how investors tend to see it. (The one-month snapshots are deceiving). As the labor market improves, retail sales are turning up, and as retail sales turn up, the labor market has improved. That's another one of those virtuous cycles.

Layoff announcements have declined to a new low. Again, as the labor market has improved, oil prices have increased, helping to explain the sharp +89% annualized increase in the rig count and last week's purchase of Smith International (SII) by Schlumberger (SLB). As the rig count has risen, layoffs in the oil patch have diminished. That's another virtuous cycle.

4. Exports Up Even on a Strong Dollar: U.S. goods exports are up 36% annualized in the last six months. Exports to emerging-market countries, which account for more than half of U.S. exports, have surged at a 42% annualized rate, led by Mexico and China. Exports to developed countries are up 31% annualized, led by Canada and the United Kingdom. And this is all with the dollar trading strongly compared to the euro and other currencies. Naturally, a lot of those exports reflect the global swing higher in inventory after huge drawdowns in 2009, but they are also powering big recoveries in other countries besides the U.S., with Russia, Mexico and Korea seeing among the most prominent rise in exports, at +79%, 55% and 40%, respectively.

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