Tuesday, November 18, 2014

The US Consumer to the Save the World.

I sort of hinted at this theme last week and it's becoming a common thread in many mainstream publications this week.

If the big 4 engines of global growth are the US, Emerging Mkts, Europe and Japan, well, Houston we have a problem.

The US consumer keeps getting dinged at every turn, but stocks continue to crank out record highs every day (more on that in a moment).  Grade B.

Emerging markets are really falling off the rails starting with China's credit crunch but I'd give them a grade of B-.

Europe is about one major issue away from a real return to recession.  When France and Greece are your economic strong points you know have a problem.  Grade C-.

Japan.  Oh, Japan.  Things seems to be going from bad to worse and it's clear the policy makers have little clue as to what approach might change the tide.  They've now entered their third recession since 2008.  Grade D-.

So, it's all about how many $200 TVs we buy from Best Buy next Friday.  If you don't do your civic duty and "rain blows upon thy neighbor for the last doll in the store" (obscure Festivus reference) next week the whole global economy might collapse.  Go forth and charge (please understand that is sarcasm.  Thx).

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This is the world that is driving stocks to more all time highs daily.....

"Japanese recession triggers hopes for more BOJ easing".

Now replace Japanese recession with Eurozone, Asian, US, Chinese and replace BOJ easing with BOE, ECB, Fed, etc., and you have a recipe for headlines for the next 2 months at Bloomberg.  Every day there is more signs of economic weakness met with more pleas for central bank management.  The fundamentals have left the building.  We are in unchartered waters my friends.

Cheers!

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