Well, the good economic news just keeps coming and coming. Last Friday, we learned that the U.S. economy created jobs for the fourth month in a row, and the unemployment rate dropped 0.1% to 5.9%. I expect that the unemployment rate will drop 0.1% almost every month between now and the November 2004 presidential election.

The U.S. economy is steadily increasing new jobs. Many analysts were critical of this because they thought even more jobs would be created, but the economy is indeed working and that's the most important thing. Productivity surged in the third quarter, being revised up to 9.4%. It's unbelievable--an unreal rate. That means that the living standard in the U.S. will continue to rise. Interestingly, the ISM manufacturing index hit a 20-year high. Much of the surge in manufacturing is due to the weak U.S. dollar. The U.S. economy grew 8.2% in the third quarter, but Canada only grew 1.1%. Canada has a strong currency and the U.S. has a weak currency, so it's clear that the weak U.S. currency is causing exports to surge.

This is just wonderful news. The economy is still very strong this quarter. Businesses are aggressively spending money so they take advantage of accelerated depreciation by the end of the. Capital spending is surging. Retail sales got off to a very strong start over the Thanksgiving weekend. I expect the stock market will continue to benefit from strong economic growth, surging corporate profits and positive seasonal forces. From Thanksgiving through the end of the year, I expect an impressive rally. This is as good as it can possibly get. Fed Chairman Alan Greenspan also seems very pleased with the strong economy and record productivity, and he hinted that the economy should be creating new jobs soon. Greenspan also plans to keep short-term interest rates low for the next several months. In fact, I don't think the Fed will raise rates until after the election because they don't want to be seen as partisan.

What many investors interpret as bad news is really turning out to be good news. China's re-emergence as the new economic engine in the world is helping boost U.S. exports, improve productivity and raise living standards throughout the world. In fact, a weak dollar just makes China stronger because the Chinese yuan is tied to the dollar. As of the third quarter, China and the U.S. were the two fastest-growing economies in the world. I also expect that the weak dollar will help boost the profits of many large multinationals.

Speaking of profits, the big news early next year is that when the fourth-quarter earnings are released, it will likely represent record corporate profits. But the stock market will not reach a record high early next year. However, by the end of 2004, I expect that the Dow and S&P 500 will be at all-time highs. I expect that the NASDAQ will continue to perform magnificently next year, but it will take at least two years or more for the NASDAQ to reach a new high.

I truly believe that we're entering a great era for investors. The strongest economic growth in 20 years has arrived. The market will be surging for at least several months as it follows record corporate profits and reaches new highs. The Fed will hold rates steady for several months as extra insurance. The flow of funds into the stock market is very consistent and will continue to boost leading stocks higher. I expect that the market will remain strong right up to the election, as the stimulus provided by the Fed and Congress will help the economy grow by at least a 5% annual rate for the foreseeable future.

Last week I told you about Amazon.com, one of my favorite stocks right now. This week, I want to share the name of another stock my readers and I are loading up on now: Occidental Petroleum (OXY).

OXY is benefiting from the surge in natural gas (due to cold weather) and has a lot of room to run from here (it's already rocketed 30% since my Blue Chip Growth readers and I first bought it in April). The company had a terrific third quarter, netting $1.14 a share, 12 cents higher than estimates. OXY has been successfully expanding its existing oil fields to boost production at minimal additional costs. Its long-term goodwill with Russia has helped the company become more dominant internationally. At the current price, Occidental is trading at less than 12 times next year's estimated earnings. Buy it today below $39.

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