FLORENCE – One of the leading investment banking firms in the Unites States is bullish on prospects for growth in the stock market this year.
“We believe the U.S. stock market is in for a full market not seen since the 1980s,”
Mike Stenger, an investment advisor with Goldman Sachs, told Florence Rotarians at their January 27 meeting. He said the stock market has seen periodic upswings over the past couple of years, “but this rally is different.”
What makes it different are recovery of the real estate market and rapid progress toward energy independence by the United States. The real estate market made gains in both 2012 and 2013, and he believes 2014 will be even stronger.
“But the bigger bell ringer will be energy independence,” said Stenger, a financial advisor with 31 years of experience. “The U.S. is now energy independent for natural gas.”
Goldman Sachs is banking on greater use of natural gas for fuel and power because the U.S. is building reserves and the price is about one-fourth that of oil for the same energy output, according to Stenger. Financial analysts with his firm are seeing more truck fleets switching to natural gas. In addition, The Tennessee Valley Authority announced plans last fall to replace two coal-fired power plants in Muhlenberg County with a gas-fired plant.
Goldman Sachs also expects the U.S to achieve energy independence on oil by 2018, “and that will be a game-changer,” Stenger said. “Outside our borders, we won’t be dependent on any other country.
“We are very excited as we go forward. We’ve got the reserves (of natural gas) and we’ve got the refineries” for oil. New technology is making it possible to extract more natural gas from depleted sites through hydraulic fracturing or “fracking” and a gas line that will run from Canada to the Gulf Coast is under construction.
Stenger sees other signs of economic recovery. Goldman Sachs analysts believe unemployment will continue to drop, and more than 200 million jobs will be added this year. He said some manufacturers are starting to “repatriate jobs” – that is, bring jobs overseas back to the United States because labor rates there are doubling and tripling.
However, job gains and economic growth likely will result in rising interest rates and decline in gold prices, according to Stenger, the uncle of former Northern Kentucky University and current Xavier University basketball standout Erik Stenger.
Stock market shares declined significantly in January, but Stenger contends the drops are typical market fluctuations.
“We believe we will continue to see a little volatility … but it’s normal stuff,” he said. “If you compare to the 1980s, the upturn began in 1982 but the average investor didn’t get in until 1986. This rally began in 2012.”
