Bullish on the Stock Market

February 28, 2012 09:51 PM
Bullish on the Stock Market

It’s easy to find bears when it comes to the U.S. stock market and the world economy. But JPMorgan’s Ann Duignan is a self-proclaimed market bull. "The global economy should get better as we go through the year," she said at the Top Producer Seminar in Chicago.

Duignan noted that economists are optimistic for growth in several newly emerging countries, including Egypt, Turkey, Vietnam and South Africa. They are following the rapid economic development of what are referred to as the BRIC nations (Brazil, Russia, India and China), which have been strong for several years. "Construction demand should be pretty strong around the world," she added.

In the U.S., many sectors that did poorly in 2011, such as construction and machinery, are poised to do much better in 2012, she said. Two examples of economic growth: the beginning of an
acceleration in truck demand and the fact that nonhousing construction is on the rise. Duignan even sees some hope in the troubled housing sector, as the beginning of a trend in new multifamily housing units has begun.

"The beginning of a trend is when you want to start investing in the machinery stocks," she said.
Duignan is more positive on future growth in parts of Europe than others are. For example, housing construction is on the rise in France and Germany. The entire continent is not displaying strength, she acknowledged.

In the U.S., Duignan noted, farmers have replaced 50,000 combines during the past five years; however, that only equates to less than 20% of the country’s fleet.

The used equipment market is likely to stay strong this year. One new trend is that farmers are buying used equipment from much farther away via the Internet. For example, Canadian farmers are buying used equipment from the U.S. with their computers.

Duignan said that while she does not see agriculture getting any better in 2012, she also doesn’t see it getting any worse. With strong cash receipts, farmers buy more combines and tractors, she said. In Europe, farmers don’t make equipment sales based on cash receipts to the extent that U.S. farmers do because farming there is more heavily subsidized. That said, European agriculture is about to change because in 2014, the European Union will make its agricultural policy more market-driven, she said.

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