Synchronized global growth is the buzzword as markets keep accelerating from one record to another. The data points suggest a different story. While US tax cuts will provide a modest bump in growth and in earnings they appear to do little on the structural or fundamental front.
Rather the story is debt and more debt. Not only the consumer, but also the US government.
From our perspective we are in a late market cycle environment setting up for the next recession and the current phase of excess will lead to a deeper downturn.
We’re collecting macro data charts highlighting potential signs of a coming macro turn. Below is a collection of some of the latest data points we’ve found. For the latest public analysis please check the main page.
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Updated January 13, 2017
On this chart above: Corporate profits have finally crossed above the Q4 2014 highs. By $50B. The Wilshire stock index has added nearly 40% since then or about $12 Trillion in market cap. So while we may expect higher earnings still in 2018 (tax cuts) I trust you will see a mismatch between real profit growth and valuations. It’s called multiple expansion.
Categories: Macro Corner