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Weekend Reading: The Global Dichotomy

Written by Lance Roberts | Aug 5, 2016

Global-Dichotomy-2

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.

SP500-MarketUpdate-Events-080216

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

 


Markets

 


Always Good To Read

 


“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.

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Lance Roberts

Lance Roberts is a Chief Portfolio Strategist/Economist for Clarity Financial. He is also the host of “The Lance Roberts Show” and Chief Editor of the “Real Investment Advice” website and author of “Real Investment Daily” blog and “Real Investment Report”. Follow Lance on Facebook, Twitter, and Linked-In

2016/08/05
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