Surprise! The economy is not booming!
THAT IS GOING TO BE THE BIG STORY IN THE NEXT FEW WEEKS.
THE RECENT "SELL OFF" OF INCOME WAS WAY, WAY OVERDONE AND PREMATURE.
I'm sticking to my story that Mr G will not raise rates now or EVER!
This so-called "recovery" was confined to reflation of the stock
market only.
The American Consumer NEVER QUIT spending and piling on debt.
The problem is that there is simply no PENT UP DEMAND to be satisfied.
EVERYBODY AND EVERYTHING IS BLOATED TO THE POINT OF GLUT.
HOW YOU "RECOVER" FROM GLUT IS THE REAL QUESTION. Because the
excesses were never purged, ANY recovery will be weak and fragile.
And, Mr G knows it. And worse, he fears unwinding the MOTHER OF ALL
CARRY TRADES to wit: THE US ECONOMY!
That said, there is always the worst case scenario of STAGFLATION!
IF THE RECENT RECOVERY IS CAUSED BY EXCESSIVE LIQUIDITY, AND IT IS,
YOU CAN GET COMMODITY AND ASSET INFLATION, EVEN WHILE THE REAL
ECONOMY STAGNATES, AS IT NO DOUBT WILL.
And the so-called "jobs recovery?" Oh Please....a one off combo of
seasonal and fudge factors! And, even a blind squirel finds an acorn
occasionally.
And, the fact that jobs "boomed" almost equally across the economy is
a little bit odd. Don't ya think? And, why are jobs "booming" with
weekly hours declining! And, temps in the toilet! Something doesn't
pass the smell test here.
BUT THEN AGAIN WITH AN ODD-BALL RECOVERY CAN YOU TRUST ANYTHING NOW?
QUITE FRANKLY THE OLD MODELS ARE FLAWED AND WE HAVE NOT YET
DISCOVERED NEW MODELS THAT WORK.
THE RECENT SELL OFF OF BONDS AND INCOME IS WAY OVER-DONE; UNLESS YOU
THINK WE ARE IN A DEATH SPIRAL INTO A DISASTEROUS STAGFLATION.
THE FED WILL NOT RAISE RATES THIS YEAR.
