The birth of His Royal Highness Prince George Alexander Louis of Cambridge could help stocks go to new highs around the world.
Experts think that the birth of Kate Middleton and Prince William’s first child — the future king — could spur economic activity in the UK, which has been suffering through a long bad spell.
Tourism, for one thing, could improve because of Prince George’s birth. Everyone, of course, will want a peek at the lad.
And there will definitely be greater optimism in Britain, resulting in what the experts call trickle-down consumer confidence. Happy people spend money on trinkets and stuff.
Once tourists are finished with England, they are likely to take a quick jaunt over to France, Spain and Portugal, which have all been suffering through very bad economic downturns.
Then visitors will want a good meal, so they’ll pop over to Italy and Greece, where people know how to cook.
Asians, the world’s biggest spenders right now, are known to wander around the world in this sort of aimless fashion.
And whatever is good for the economy is, of course, good for stocks. So you can expect stock prices worldwide to rally thanks to the 8-pound, 6-ounce royal.
Huh? Has John been drinking again?
What I just wrote — and I hope you’ve figured it out by now — is complete nonsense. But so too are many of the other reasons experts have given for rallies in stock prices recently.
My theory is this: People are willing to believe anything if an “expert” can give some half-assed explanation of the stock market on TV or in print without cracking a smile.
My best wishes to all new parents around the world. And, of course, to the stock market, which itself is giving birth to a new bubble.
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Now, my real thoughts on the market.
Stock prices keep going higher. The question is, why?
ï®Could it be the economy? Probably not. The US economy likely grew at just below a 1 percent annual rate in the second quarter that recently ended. That’s worse than the first quarter’s anemic 1.8 percent.
And the third quarter? It probably won’t be much better, since government spending cuts are likely to kick in and reduce economic activity.
And, as I said in my two previous columns, economic statistics being put out by Washington aren’t very trustworthy to begin with, so we really don’t know what’s going on.
ï®Could corporate profits be the reason for the stock market’s rise? That’s unlikely.
As of yesterday, 101 companies have warned that their profits would be below expectations, and only 16 are predicting better-than-expected earnings. That’s the worst ratio in 10 years, according to Thomson Reuters.
Wall Street is expecting profits to rise 7.2 percent in the July-through-September quarter compared with 3.1 percent in the second quarter. But estimates all year started out high and then were brought down.
So don’t get your hopes up.
Profits in the fourth quarter are expected to be 12.1 percent higher — which only means that Wall Street analysts really do believe in Santa Claus.
ï®Maybe corporate revenue is really good? Nope again. Only 50 percent of companies had better-than-expected second-quarter revenues. The norm is 61 percent. In fact, this is one of the worst revenue performances recorded.
Detroit is bankrupt, and other cities may follow. Most of Europe is still a mess. And even China’s economy is slowing.
That leaves us with the Federal Reserve, which has been trying to keep rates extremely low, to Wall Street’s joy.
The Fed has been printing trillions of dollars — although “not literally” according to Fed chief Ben Bernanke — and that has been propping up stock prices.
The only problem there is that Bernanke can’t do this forever without the bond market (which really determines interest rates) revolting.
President Obama may want to fool himself — as he did in a speech yesterday — into thinking the stock market is giving off some positive economic signal.
I’m going to quote the immortal words of Sgt. Phil Esterhaus on the old cop show “Hill Street Blues”: “Let’s be careful out there.”
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Facebook still hasn’t taken down the four-minute video of an 8-month-old child being repeatedly beaten by a woman. The social network believes, as one of its executives said recently, that people have the right to be offensive online.
I wonder how companies whose ads ran alongside that child-beating video feel. I have screenshots of ads from Citicorp, Hershey, Oakland University, CNN, ThermaCare, HomeDepot and others accompanying that video.
Facebook is also refusing to take down pictures of two boys —apparently in Myanmar, formerly Burma — who are dangling from their neck after being hanged.
Amazon, Disneyland, Grayling Industries, The Peninsula Chicago, Amazon, Citi and Nikon were unlucky enough to appear on the hanging page.
I’m going to start calling the chairmen of these companies today to see if they mind this offensive stuff.