This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Kostohryz: Is the S&P 500's New High Fundamentally Warranted?


Second, most full-cycle macroeconomic indicators are actually flashing bullish signs, at the moment. For example, given high unemployment and relatively low capacity utilization, the economy has lots of running room before meeting any cyclical economic constraints. And on a rolling-three month basis, most cyclical economic indicators are showing acceleration. Thus, in the absence of some sort of external shock, the U.S. economy seems poised to accelerate beyond the 3% growth level before the end of 2013.

Third, monetary conditions are supportive of the U.S. and global economies, and according to Federal Reserve officials, highly accommodative monetary conditions are likely to remain in place for at least the next 12 months.

Secular Fundamentals

I define a secular time frame as at least three full economic cycles that will generally encompass about two decades. This is the time frame where the situation is currently less supportive of stocks.

First, the massive accumulation of private and public debt that has occurred in the U.S. in the past decade must inevitably weigh down on long-term growth in the next two decades relative to the average of the previous century. There is really no way to ultimately escape the fact that higher debt-servicing costs as a percent of private and public income must necessarily lead to slower economic growth and/or higher inflation, and/or higher macroeconomic volatility. There is no free lunch.

Second, demographic dynamics are not particularly supportive of growth on a long-term secular time frame. The productive workforce in the U.S. is projected to shrink in the next two decades, while the number of dependents (children and elderly) is projected to rise, creating a fiscal and productive drag.

Other variables that are key to the secular economic outlook are ambiguous.

For example, the prospect for long-term productivity growth is a hotly debated topic. Some economists believe that the U.S. is at the cusp of a productivity boom, driven by new technologies. Other prestigious economists believe that the U.S. is at the cusp of a major productivity slowdown, caused by a winding down of the productivity gains that have heretofore been generated by information-age technologies.

2 of 4

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs