I think we had the slowdown and it was papered over by the Fed printing $300B since December. Then the coronavirus came and CBs started printing like crazy again, including China flooding the markets and banks with $300B in liquidity. So they may have stabilized things with money printing and liquidity. But will that be enough to stave off recession? I still don't think so. The reason why is that supply chains have been massively disrupted by the coronavirus. In addition, the Chinese economy is crashing hard from the disruption to daily life. That's going to whack their GDP by 3-4% or more. Some estimates say their GDP will drop to 1% this year. That will impact the global GDP by 1-2%. That's a global synchronized recession, since we're only running at 2% global GDP now.
There's only so much that money printing can do. This whole economy is still running on fumes and all assets are way overvalued relative to future earnings potential. It's a bit bizarre what is happening in the stock market, but that can simply be explained by asset price inflation from CB activity. Look at S&P 500 Earnings per Share. It has been flatlining for over a year. Does this look like a growing economy to you? No, it's just PE inflation from money printing that is driving up the stock market. Nothing else. This coming week, we'll see the final print for Q4 2019, but it's not likely to show much of an increase from the prior year's same quarter at all. So that is the macro picture. Why do you believe the economy is doing so well? The numbers don't show it.
DateValue|
| Sep 30, 2019 | 133.01 | | Aug 31, 2019 | 133.91 | | Jul 31, 2019 | 134.69 | | Jun 30, 2019 | 135.71 | | May 31, 2019 | 135.44 | | Apr 30, 2019 | 135.43 | | Mar 31, 2019 | 135.86 | | Feb 28, 2019 | 135.94 | | Jan 31, 2019 | 135.84 | | Dec 31, 2018 | 135.42 | | Nov 30, 2018 | 134.30 | | Oct 31, 2018 | 133.18 | | Sep 30, 2018 | 132.73 |
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