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Tuning Engines of Growth

June 20, 2012 – 5:00 pm

There certainly is no shortage of world economic issues to worry about: Spain’s high debt cost, Greece’s new elections, a slowdown of Growth in Asia as well as a slowing in the U.S., but maybe we should take a look at what is shaping up to be hopeful signs across all regions.

Greece’s new government is pro Euro, Germany appears to be agreeing to turn toward a closer, backing steps to push down high interest rates for the weaker EU members and in Asia they are now pumping the economy with more liquidity instead of tightening the financial strings as they were doing just last year.

Even in the U.S. we had some better, though still not great news, on housing. Yesterday the new housing starts report for May showed 708,000 new units being built. That number was less than expected which was closer 720,000. How can that be interpreted as good news? It’s not! Housing starts are a lagging economic indicator. The good news was the very large spike in building permits. They are at 780,000 the highest level since October of 2008. Permits are a leading economic indicator. Even in the construction starts report there was some good news. The previous month’s starts were initially reported as 723,000 and that was revised to 780,000. If you step back a little and compare last year’s numbers with this year’s, housing starts are up 28.5%.

Things just might be looking up. At the very least all economic engines of world growth are moving in the same direction.

Good Trading
Steve Peasley

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