CHICAGO, Feb 25 (Reuters) – Over the past few months, it has
been much easier to make a case that widespread financial
anxiety is easing, although trying to quantify the upsurge can
be like trying to catch a frog. As soon as you grab for it, it
At the beginning of last year, investors were grouchy about
nearly everything and kept putting money into bond funds, while
the stock market slipped. Then numerous economic indicators
started pointing north and sour global financial news became
less prevalent, and the tide turned as money started flowing out
of bonds and into stocks.
As financial anxiety eases, investors feel they can take
more risk and worry less about the worst-case scenario. This is
good news for the overall economic picture in the United States.
While there are sure to be bumps in coming months, the
prevailing trend is for a sluggish recovery in the United States
and abroad and the current stock rally – the S&P 500 index is up
more than 6 percent year to date through Feb. 22 – might
continue to be bolstered by the Fed’s easing policy.
For sure, it seems brighter days lie ahead and here is why:
* The tide seems to be turning on the major fears: The euro
zone probably won’t collapse, the U.S. is continuing to rebound
and hyperinflation is not around the corner. Meager inflation
and interest rates combined with less global anxiety will give
legs to the current stock rally. It’s as if the mass psychology
of pessimism has turned a corner.