As previously discussed, stocks don’t need a lot of GDP growth to do moderately well.
Even with weak GDP numbers, high unemployment, a week consumer, weak housing, higher crude prices, moderating export markets, near 0 rates, QE, and a major earthquake in Japan, earnings for the first half of 2011, corporate earnings on average were pretty good.
So if govt. isn’t forced to go cold turkey to a balanced budget which could cause stocks to fall out of control, stocks could do well.
Risks remain, however, including the very real possibilities of trouble in the euro zone and China.
Because we fear becoming the next Greece, we continue to turn ourselves into the next Japan