Alan Greenspan, accused of being overly optimistic when he was Federal Reserve Chairman during from 1987 through 2006, is bullish on America again.
He sees the economy growing strongly this quarter.
“It looks as though it's going to be 3 percent, maybe even higher,” he told ABC. The economy shrank 0.7 percent in the second quarter.
“The problem with knowing what the third quarter is going to look like is we won't get all of the data for several months. So there is a lot of guesswork involved. But it's on-track, at this stage, for more than 2.5 percent,” Greenspan’s previous estimate.
Greenspan acknowledges that some economic data have been weak in recent weeks. “But this is what a recovery looks like,” he said.
“In retrospect we always look back, and we see the ups and the downs, and we just go right through it. It's premature to act on this type of information (of economic weakness).”
Greenspan doesn’t see a need for more fiscal stimulus.
“Only 40 percent of the first stimulus has been in place. And there is a considerable debate going on in the economics profession about how effective this stimulus package is,” he explains.
“So in my judgment it's far better to wait.”
Greenspan’s views are in line with Obama’s chief economic advisor Larry Summers.
“I would be very reluctant to accept the idea that the American economy no longer has the potential to grow rapidly,” Summers said in a recent speech.
The market recovery is under way and will launch a 10-year bull market, says Neil Hennessy, the chairman and CEO of Hennessy Advisors of Hennessey Funds.
The market is only beginning its 10-year bull, he told Yahoo! News.
"The good news is that there's no confidence out there," he says.
"The real good news is that there's a lot of money on the sidelines. I think we're in for a sustained rally.”
At the end of the 10-year run, Hennessy predicts the Dow Jones Industrial Average will have doubled.
Investors will turn back to buying stocks since low interest rates make it more appealing than buying government bonds, he said.
Investors are still holding onto a large amount of cash, he notes.
Hennessy said it makes no sense to invest money into a 30-year U.S. government bond at 4 percent and have to wait 30 years for the investment.
A better opportunity is the Dow Jones Industrial Average because its 30 components are yielding a 3 percent dividend now.
Meanwhile, Carl Weinberg, chief economist at High Frequency Economics, is worried investors are too optimistic about a comeback in Europe, the Wall Street Journal reported.
Investors should not forget about increasing deflationary pressures, he said.
Stocks could face a decline in the near future, he said.
“In a deflation or low inflation environment, bond yields should tumble as stock prices fall — watch out!" he wrote.
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