Earlier today, the U.S. Commerce Department reported second quarter GDP (gross domestic product) estimates of 4.0 percent. This number was much better than expected considering the last quarter GDP was reported to be minus 2.1 percent. Does this big jump in GDP now cause the Federal Reserve (the central bank who controls U.S. economic policy) to start increasing interest rates? After all, yesterday's consumer confidence number was 90.7, which was highest reading since the peak in 2007. If that comparison to the 2007 peak is not scary, I don't know what is.
Traders and investors should remember a quote by the legendary investor John Templeton, who stated that "bull-markets are born on pessimism, grow on skepticism, mature on optimism and die on euphoria." Well, this rally has certainly grown on skepticism over the past five years. Are the markets now getting euphoric? When they do start to get euphoric you will start to see that good news will become bad news. Has that market euphoria possibly started today? Only time will tell, but it is well worth watching since the major stock indexes have tumbled from today's morning highs on probably the best news in five years.
