There are still plenty of catalysts for shares to move higher.
The bulls just keep roaring. World stock markets keep on keeping on. Most asset classes, like coal, iron ore, oil, gold and the share market, are continuing their long bull run.
As the old saying goes, there's always a bull market somewhere. The difficult part is usually finding it.
But today, the bull market is just about everywhere. You trip over it getting off the tube at Bank. It hits you in the face as you walk down Threadneedle Street. Bull, bull, and more bull.
Two Bears
There are two notable exceptions.
The first is sterling. If you've just booked your trip down under for the forthcoming Ashes series, you'll know how expensive the whole undertaking has now become. Sterling is in a bear market.
The second is interest rates. Base rates here in the UK are marooned at 0.5%, and savers and retirees alike are suffering. Interest rates are in a bear market.
Regarding sterling, I suggest you consider holidaying in Blackpool or Cornwall this summer rather than Crete or Rome. I also suggest you watch the Ashes on TV rather than journey down to Australia.
The Coming Bull Market
Regarding interest rates, Ben Bernanke (aka Santa Claus) has just given us yet more hope. He's pointing the way to the coming bull market. It's called high-yielding shares.
You see, the Federal Reserve has just reiterated that US interest rates will remain at close to zero for an "extended period". As usual, it was music to the stock market's ears, with markets rising across the globe.
Economists translate Santa Bernanke's "extended period" to mean interest rates staying at virtually zero until the final quarter of this year. They could even stay this low for even longer, given the Fed's comments that consumer spending has been "expanding at a moderate rate", but was limited by "high unemployment, modest income growth, lower housing wealth, and tight credit."
More Catalysts
"The market really liked what it heard for a quick pop," said Dan Cook of IG Markets on Bloomberg.
Looking slightly longer-term than a 'quick pop', Randy Bateman Huntington Asset Advisors said "The market has done pretty well year-to-date. We still see catalysts to move stocks higher. Good cash flow, merger and acquisition activity, stock buybacks and dividend increases will tempt investors. We're looking for a pretty good year of double- digit return."
Bull, bull and more bull.
And the good news for those of us lucky enough to still have jobs is that, according to three Obama administration economic officials, including Treasury Secretary Tim Geithner, US unemployment is set to "remain elevated for an extended period."
No Job, No Care
If you don't have a job, stiff cheddar as far as the stock market is concerned. All it cares about is that if unemployment is going to remain high for "an extended period", then interest rates should remain low for "an extended period".
If that's not a flashing buy signal for shares, I don't know what is.
Low interest rates, and the prospect of low interest rates for most of the rest of this year, are driving the stock market higher and higher. For now…
Of course, it's not all plain sailing ahead. Interest rates will go up -- they certainly can't go down any lower. High unemployment should mean the economic recovery is somewhat muted. Government deficits remain high, "undesirably" so, according to Geithner.
But the market doesn't care for such immateriality, for now…
So step right up folks.
Banging The Drum
I've been banging the drum for high yielding blue chip shares for some time now. The drum beats are getting louder.
It's not just FTSE 100 companies like AstraZeneca (LSE: AZN) that are yielding above 5%. How long can cash-rich FTSE 250 companies like Kier Group (LSE: KIE), Ashmore Group (LSE: ASHM) and Moneysupermarket.com (LSE: MONY) trade on forward dividend yields above 5%?
For "an extended period"? I wouldn't count on it.
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> Bruce Jackson has an interest in AstraZeneca.
