Tags: Peter Warburton | markets | stocks | united states

Peter Warburton to Moneynews: There Is 'Potential' for US Markets to Push Higher

By Glenn J. Kalinoski and David Nelson   |   Tuesday, 28 May 2013 02:05 PM

U.S. markets have the potential for additional gains, according to economist Peter Warburton, director of Economic Perspectives, a U.K. consulting firm.

"Part of that view would be related to the fact that the Federal Reserve is continuing its purchase program of Treasury debts and mortgage-backed securities," Warburton said in an exclusive interview with Newsmax TV.

"We’ve seen plenty of evidence in recent days that some of the benefits of this policy are starting to spread out and … the economy just now seems to be capable of generating … a reasonable number of jobs each month despite … the tightening … taking place in the budget."

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Editor’s Note: Put the World’s Top Financial Minds to Work for You

The Standard & Poor's 500 Index has increased 3.3 percent during May, a seventh month of gains, the longest winning streak since September 2009, according to Bloomberg News. It has skyrocketed 144 percent since March 2009, fueled by better-than-estimated corporate earnings and three rounds of bond purchases by the Fed.

"America has managed economic growth of about 2 percent for the last three years, but in Europe … it has been closer to 0 percent, certainly for the last couple of years," he said.

"In America … the bad loan problem has a long way to [heal] and house prices are starting to pick up again in many states, but that’s not true certainly in the southern part of Europe. A flat economy and rising unemployment means that the bad loans are still multiplying."

He offered caution when asked about stabilization in Europe and declining bond yields in southern Europe.

"I think we have to be careful," he said. "The scheme that the European Central Bank put in place last September ... basically it hasn’t been activated. No one has applied for the money, but just for the scheme being there they did a great job of holding back Italian and Spanish government [bonds]," he said.

"But the danger is that if Germany throws rocks and creates uncertainty around the scheme, then I think that could send those bond yields flying back up again."

Editor’s Note: Put the World’s Top Financial Minds to Work for You

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