>GLOBAL MONEY TRENDS

Goldman Sachs sees Year-end Rally on Wall Street - by Gary Dorsch, Editor

Wall Street has entered a new bull market, and the S&P-500 index could rise as much as 10% from current levels by the end of this year, declared Abby Joseph Cohen, the head of Goldman Sachs’ investment policy committee, on August 6th. Goldman Sachs, the most profitable firm on the street, predicts the S&P-500 will climb into a range of between 1,050 and 1,100 toward year-end, said Cohen.

Since hitting a 12-year low in early March, the S&P-500 index has rebounded 47% from a low of 666-points in March, to above 1,000 this week. “We do think the new bull market has begun. It may prove it began in March of this year,” Cohen said. If correct, a 10% advance for the Dow Jones Industrials will lift the blue-chip indicator towards the psychological 10,000-level, a level first reached in 1997.

Hopes for a summer rally on Wall Street are bolstered by the astounding rebound in the US Purchasing Manager’s Index (PMI), an indicator which measures factory activity. The Factory PMI rose sharply to a reading of 48.9 in July, up from 44.8 in June, and new orders jumped to their highest level in two-years, mirroring improved readings in the industrial sectors in China, Europe, Japan, and Mexico, helping to send global stock markets sharply higher. The PMI has recovered to levels that prevailed before the collapse of Lehman Brothers and the ensuing global credit crunch.

US wholesalers are ready to replenish their inventories, and go on a spending spree, according to the latest reading on second-quarter GDP. US-businesses whittled down their inventories of unsold goods by $141-billion in Q’2, a record pace.

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