Lakshman Achuthan: "The Entire West Is In The Yo-Yo Years"

ECRI's Lakshman Achuthan thinks we've hit stall speed. Sobering analysis of the economic fundamentals versus asset market performance. The economic term "recession" is about the former. Achuthan doesn't like what he sees of the fundamentals.

In 80% of the last 15 recessions you have had an associated bear market. That is why if you hear the word recession, you say, oh my gosh, we have to run to the hills in the equity market. But in three out of those 15 recessions, we had stock prices rise through the recession.

I suspect that the Fed has engineered artificial support for asset markets through low interest rates and QE to create inflationary expectations (even though there is no mechanism to account for it). This has had a euphoric effect on equities. When the economic fundamentals actually improve, then the Fed will start raising rates again, and rising interest rates affect margin cost and therefore dampen speculation in asset markets. It's difficult to tell what will happen when market behavior has been intentionally distorted.

Zero Hedge
"The Entire West Is In The Yo-Yo Years"
Tyler Durden