WEDNESDAY MAY 26, 2010

More Positives

While the talking heads on CNBC continue to predict doom, the economic numbers continue to come in strong.  Yes, the news out of Greece is bad, but let's put it in perspective.  Greece is 2% of the Euro economy.  Even if Greece's economy went to zero (which is doubtful even for the Greeks!), it wouldn't be more than a blip.  Extending that thought, the PIGS (Portugal, Italy, Greece and Spain) account for about 18% of the Euro economy.  Weakness in these markets are a clear negative, but not a catastrophe.

Meanwhile, the evidence that the economy continues to improve is abundant yet ignored.  The Federal Reserve released the minutes of its last Board of Governors meeting and three Fed Presidents (Kansas City, St. Louis and Dallas) called for an increase in the Fed's discount rate.  This is evidence that the U.S. economy is doing well.  In particular, it shows that the middle of the country, with a heavy agriculture and manufacturing base, is performing well.  Indeed, outside the real estate bubble states (CA, AZ, NV & FL), the auto state of MI and the finance states of NY and NJ, the other 43 states are doing just fine.

Yesterday, the Consumer Confidence number was released and it was the highest reading since March of 2008!  And this morning, the Durable Goods report was stronger than economist's expectations and has been up for the fourth time in five months.

Europe will continue to dominate the airwaves with negativity.  However, strong economic numbers  continue to roll in, providing more reason to be optimistic. 

POSTED AT 1899-12-30 08:36:00.0

KEN ENTENMANN, CFA
SENIOR VICE PRESIDENT AND
THE DIRECTOR OF INVESTMENT MANAGEMENT SERVICES

Ken is a Senior Vice President and the Director of the Trust and Investment Services at Alliance Bank, N.A. He has 23 years of investment experience and oversees the management of assets totaling $1 billion. He holds a B.S. in Applied Economics and Business Management from Cornell University and an M.B.A. from the William E. Simon Graduate School of Business Administration at the University of Rochester. He has also earned his Chartered Financial Analyst designation. He is a member of the Executive Committee of the Trust Division of the New York Banker's Association. He is also a director of the Central New York Community Foundation.

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