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Weekend Reading: The Global Dichotomy

Written by Lance Roberts | Aug 5, 2016

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Earlier this week, I showed this chart of all of the Central Bank interventions over the last 18-months which has been supporting asset markets despite deteriorating earnings.

I will now add to this chart the Bank of England which yesterday morning fired their own “QE Bazooka” much like the ECB earlier this year in a rush to offset any potential fallout from the “Brexit.”

The great global dichotomy, of course, is that while Central Banks have been flushing the globe in liquidity, suppressing interest rates and bailing out banks as fast as possible, the mainstream media continues to tout the strength of the economy.

“No recession in sight.”

Really?

I lived in France and Spain early in my investment career and was amazed by how much alcohol was consumed on a regular basis. In the morning with coffee, wine over lunch, late afternoon drinks, wine with dinner, alcohol after dinner.

I asked once what the alcoholism rate was in France and received a rather sharp and snobby reply. “We don’t have an alcoholism problem.”

How do they know? Do they have a national “dry out” day to see how many people get the shakes?

It is the same with the economy and the “no recession” premise. If the economy is growing, and there is really “no recession in sight,” then why is there such a panic by the BOJ, BOE and ECB to expand their accommodative programs? Why isn’t the Fed raising their benchmark rates? Why are earnings deteriorating across sectors on an unadjusted basis?

In other words, maybe we need a national “dry out” day from the regular QE consumption to assess the real need for a “global rehab program.”

Unfortunately, that won’t happen until the market drives off the “Chappaquiddick” bridge and investors began to demand answers for why such a tragedy was allowed to happen…again.

Here is what I will be reading this weekend.

Interesting Stuff

Take This Job Indicator And Shove It by Danielle DiMartino-Booth via Money Strong
Mind The GAAP: How The Game Is Really Rigged by Tyler Durden via Zerohedge
What Happens When It Ends by Charles Hugh-Smith via OfTwoMinds
Beyond Two Evils by John Stossel via Reason.com
The First Conspiracy Theory by Josh Zumbrun via WSJ
No Free Lunches, Or Colleges via The Money Illusion
When Helicopters Eventually Crash by Tom Stevenson via The Telegraph
The World Is Unraveling by Steve Forbes via Forbes.com
Trapped In A QE Forever Cycle by Satyajit Das via FT
The Chart Everyone Is Talking About by Macro Man
Jamie Dimon Is Wrong On Economy by Jeff Cox via CNBC
5 Unique Charts From GDP Report by Eric Bush via GaveKal Research
Recession Risk IS Rising by James Hamilton via Econobrowser
Welfare Has Spiraled Out Of Control by Stephen Moore via Washington Times

Markets

Market Saying Something Has Changed by Chris Ciovacco via Ciovacco Capital
Yield Curve & Fed Tightening via The Capital Spectator
Rosenberg Nails Stock Market In 8-Words by Sam Ro via Yahoo Finance
Stocks Will Fall As Uncertainty Rises By Byron Wien via Barron’s
Telltale Indicators Stocks Are Topping by Michael Sincere via MarketWatch
Stocks Could Predict White House by Heather Long via CNN Money
Disconnect Between Stocks & Economy by Dan Moskowitz via Investopedia
Investors Should Pay Heed To BOJ by Jeffrey Snider via Alhambra Partners
We Are The ECB – Resistance Is Futile by David Keohane via FT Alphaville
Why Is The Stock Market So High? by Jeff Sommer via NYT
Goldman, Stocks To Fall By 10% by Julie VerHage via Bloomberg
Stocks Could Shoot Higher by Avi Gilburt via MarketWatch
Better Earnings Don’t Justify S&P Highs by Anora Mahmudova via MarketWatch

Always Good To Read

Beware Earnings Before Bad Stuff by Michael Rapoport via WSJ
No Recession, Just Slouching That Way by Joe Calhoun via Alhambra Partners
Debt-To-EBITDA Highest In History by Tyler Durden via Zero Hedge
Why The U.S. Economy Hasn’t Crashed by Anthony Mirhaydari via Fiscal Times
Extreme Overvalued Syndrome by John Hussman via Hussman Funds
Earnings Smaller Than They Appear by Neil Howe via HedgEye
Entitlements – 6th Biggest Economy On Earth by David Stockman via Contra Corner
Mmm, Mmm, Good – But Very Expensive by Michael Lebowitz via 720 Global
Active Managers All-In On Stocks by Dana Lyons via Tumblr
1-in-1200 Year Event: Utilities by Jesse Felder via The Felder Report

“Should you find yourself in a chronically leaking boat, enery devoted to changing vessels is likely more productive than energy devoted to pitching leaks.” – Warren Buffett

Questions, comments, suggestions – please email me.