Stocks have been surging of late in the
wake strong corporate profits and signals that the Federal Reserve is likely to continue its policy of monetary stimulus.
A factor which has encouraged the compression of credit spreads has been the strength of the global economy, as it has led investors to become less risk averse in the face
of strong corporate profit growth, sound corporate balance sheets and good economic performance by emerging market economies.
Usually, a strong economy leads to
strong corporate profits, not the other way round.
There's only inflationary pressure if employment is robust thanks to
strong corporate profits and consumer demand.
Strong corporate profits are giving businesses the wherewithal to expand both their factories and their offices.
Continuing solid spending by consumers and businesses, steady government spending, a recovering stock market, and
strong corporate profits are behind the steady growth.