The equity markets continued to march sideways in the third quarter despite some encouraging news for both the US economy and corporate profits. It is becoming more evident that investors are suffering from a case of indecision and are asking themselves, "Is the economic glass half empty or half full?" I think the divisive political season has contributed greatly to the sense of not knowing which viewpoint is correct and it will be interesting to see whether investors will act with more conviction when the election is finally over. I think they will.

In any discussion today about the current state of affairs of our economy it is important to recognize that there are good arguments on both sides of the question and reasonable minds can disagree, but I choose to view our current economic and market conditions in a positive light and therefore remain cautiously optimistic about the prospects for stock prices in the coming months.

The economic negatives are well known: energy prices are too high, the federal deficit is a concern, the employment picture is perceived to be weak, the consumer is being pinched by high costs for healthcare and energy, consumer confidence is erratic, and the declining value of the dollar is of concern.

The economic negatives are well known: energy prices are too high, the federal deficit is a concern, the employment picture is perceived to be weak, the consumer is being pinched by high costs for healthcare and energy, consumer confidence is erratic, and the declining value of the dollar is of concern.

The economic positives are: historically low interest rates, continued strong worker productivity, reasonably strong GDP growth (3.7% last quarter), and early signs of increasing corporate investment, improving job growth in the last year, strong corporate profitability, low inflation, and a climate of innovation that continues to be impressive.

Investors of late have been changing their minds back and forth on the half empty/half full question for the last 10 months and thus the stock markets have ended up flat year to date. With the election soon to be out of the way investors will focus more attention on the economic data and the data looks good. In addition it appears that corporate earnings should continue to be strong at least into the first half of 2005. I think that there is a good chance that the price of oil will moderate and that people and corporations alike will begin to see economic opportunity growing again in the coming months. Despite all the obstacles and the required cautiousness of the times we live in, bring on the year end rally.

So what do you think? Is the economic glass half empty or half full?