Philly Fed President Charles Plosser today stated that the U.S. economic growth is accelerating faster than expected and that current economic strength is broad-based.
What’s the point? There has been considerable debate about the pace of U.S. economic growth both for the short and long term. Plosser’s comments support our view that the pace of U.S. economic growth should accelerate this year which, in turn, should be positive for corporate profits. Corporate profits are the primary driver of stock prices over the long term. We think the stock market at its current all-time high levels is already discounting, at least in part, the expected improvement in corporate profits in 2H-14. We have seen forecasts calling for growth in corporate profits of as much as 10% in 2H-14.
Link: http://money.msn.com/business-news/article.aspx?feed=OBR&date=20140624&id=17724994