Americans are feeling optimistic about the economy.
That’s an easy conclusion to draw just from looking at the stock market over the past four months or so. But Wall Street’s optimism isn’t always reflective of the opinions on Main Street.
Yet according to a new Pew Research Center survey, roughly three out of every five people in the United States (58%) say the economic situation is very or somewhat good.
This number represents a sharp increase from the same survey taken last spring. Then, 44% of the American public described the economy as good. That’s the biggest year-over-year jump in the survey’s history.
Perhaps more importantly, Pew says that this is the most-positive assessment of U.S. economic conditions since 2007. It’s also just the second time that half or more of those surveyed have given the economy high marks.
So, what’s driving these newfound feelings?
It’s tempting to immediately turn to the election results for the answer. But I wanted to refrain from that initially to see if there were any other reasons in the survey for the positive economic vibes.
Yet an objective read of the data leads us to only one conclusion. That is, the newfound optimism is being driven by the increase in sentiment among those who identify as Republicans. (See chart below.)
Here’s how Pew described the situation in its recent release:
Roughly six-in-ten Republicans (61%) and Democrats (60%) say conditions are very or somewhat good, with sentiment among GOP supporters roughly doubling in the past year. More than half (54%) of independents agree.
Just a year ago there was a 26-percentage-point partisan difference on economic conditions, with Democrats being far more bullish on the economy than Republicans. This was the case throughout the Obama administration.
This means that, basically, Republicans who were surveyed are feeling increasingly good about the economy. Not just the economy, but also the perceived pro-growth policies of the Trump administration.
And, that optimism and good feeling about the economy is what we’ve been telling you has driven the stock market since Election Day.
The increasingly positive feelings about the economy are generally good. But I also think that the optimism and positive sentiment is going to have to start being backed up by more actual hard economic data. Stocks will need that to keep moving higher.
Not that the hard data has been bad; it hasn’t. But if you consider that Q1 GDP growth is set to come in at just 1.2%, that’s not very robust. Especially when you consider the economy grew at a 3.2% pace in Q4.
|Image credit: Atlanta Fed|
One potentially positive set of upcoming data points comes to us from the research firm FactSet.
As reported in the Wall Street Journal, U.S. companies are poised to report their strongest quarterly earnings in years. This is another sign that the stock-market rally could have further to run.
Here’s the money quote:
Analysts expected earnings for S&P 500 companies to grow by 9.1% in the first quarter from a year earlier, as of March 31, which would mark the highest growth since the fourth quarter of 2011, according to FactSet.
While these expectations are encouraging, keep in mind that they are just that: expectations.
And with higher expectations comes the greater likelihood of greater disappointment if the numbers fail to deliver.
As the WSJ put it:
… disappointing results could reignite concerns that stock-price gains have outpaced earnings growth.
That’s food for thought right there. It’s also yet another reason why I would like to see the hard data confirm the happy economic sentiment that’s wafting around Wall Street and Main Street.
Americans’ optimism about the economy didn’t translate to stocks today, as they stayed flat. But as always, our small-cap resource expert Sean Brodrick found treasure … and he’s sharing his map with you below …
Mining for Money
Maps to Treasure Island
By Sean Brodrick
Do you see the potential breakout forming in gold and silver? Man, we are looking at a blast-off if the metals push through overhead resistance.
Spoiler: I strongly believe gold and silver ARE going to blast off, for all sorts of fundamental reasons.
Let me show you two charts. These things are so bullish, they’re like treasure maps.
Here’s a chart of gold, which just hit its highest level since President Trump was elected.
You can see gold is zig-zagging higher to hammer against overhead resistance. It sure looks like a "cup and handle" pattern. I don’t want to get too technical, but a successful breakout here would target $1,334.
However, that’s a minimum target. I think that the real first target would be $1,370. That’s been overhead resistance multiple times.
And as I’ve told you previously, my target for next year is $1,540.
Sure, that would be a weigh station on the way to higher prices. But gold zigs and zags. We have to expect pullbacks and pauses. It’s a good time to survey the landscape and reload for the next leg higher.
And that’s just gold. Silver looks even more bullish! Yeah, the chart in silver should have bulls frothing at the mouth. Check it out.
An inverse head-and-shoulders pattern has formed in silver over the past seven months. Again, I don’t want to get too technical. But a breakout here gives us a target of $21.30.
That’s a move of 16% in silver. A good rule of thumb is that leveraged silver stocks can triple the percentage move in the underlying metal.
In technical terms: Hawt diggity dawg!
Now, that doesn’t mean the cup-and-handle pattern must work out in gold. Or that the other pattern must work out in silver. As the old saying goes: "Every sunken ship has a chart."
On the other hand, charts can also reveal the path toward extraordinary wealth. And these charts show the way to Treasure Island.
Before I go …
Speaking of treasures, I’m putting the finishing touch on a virtual goldmine of my favorite microcap stocks in the metals and mining space. And I’m planning to unveil these to our very best subscribers in the coming weeks.
I want to know what you think, so if you have a comment or question about today’s Afternoon Edition topic, or any of the topics we cover, let me know. All you have to do is leave me a comment on our website or send me an e-mail.
Good luck and happy investing,
Uncommon Wisdom Daily