Tag Archives: economics

A New Policy Orthodoxy Is Emerging

babel 2My Comments: The more things change, the more they stay the same. Or is it the other way around? If your future financial wellbeing depends on guarantees and positive market performance, the more you need to pay attention to these trends. Or at least interact with professionals who do follow and understand them. This is pretty deep stuff so if you are easily bored by economics, it may put you to sleep.

August 24, 2016

Global CIO Commentary by Scott Minerd, Guggenheim Investments

There is a new debate emerging among policymakers in advanced economies. Two Federal Reserve Bank chief executives have taken the position that the natural rate of interest in the United States is much lower than previously assumed (see the chart at the bottom of these comments). These experts suggest the need for a slow pace of increases in short-term rates, with one Fed president projecting only one 25 basis point increase between now and 2019, and the other suggesting negative rates are increasingly possible in the next economic downturn.

Recently, U.K. gilts briefly joined the growing number of sovereign bonds that trade at negative yields. Investors should take note. Capital flows from regions of the world with slow growth and negative rates will continue to exert downward pressure on the term structure of the U.S. interest rates. As I have said before, it would be imprudent for investors to rule out the possibility of negative rates in the United States.

As the world’s major economies are mired with record low bond yields, practically non-existent inflationary pressure, and lackluster economic growth, policymakers cannot continue to simply do more of the same old thing hoping that even lower rates and more quantitative easing alone will reach the desired employment and inflation targets. After years of economic malaise in the wake of the financial crisis, the time has come to recognize that the current policy paradigm is nearing the limit of its effectiveness and perhaps already has exceeded it. I have written before of the unintended consequences of negative interest rates. One example is the unexpected strength of the yen after the Bank of Japan moved to negative overnight rates. The message is clear – the current monetary policy regime cannot succeed alone and aggressive fiscal policy must be added into the global policy mix. The chorus of monetary voices demanding fiscal action is growing.

Both of the aforementioned Federal Reserve Bank Presidents, James Bullard of St. Louis and John Williams of San Francisco, have evolved their views on the intractability of the current economic situation. Bullard believes that the best we can do in this environment is to assume that the current state of real output, employment, and inflation will continue over the next few years. He admits that over time economic regimes change, but “the best that we can do today is to forecast that the current regime will persist and set policy appropriately for this regime.” For him, the current “regime” means just one 25 basis point move between now and 2019. In the meantime, Bullard has stopped submitting longer-run forecasts to the Federal Open Market Committee’s (FOMC) Summary of Economic Projections, almost in protest.

While Bullard may prescribe additional policy measures in the future, John Williams of the Federal Reserve Bank of San Francisco wants to become proactive now. He is one of the world’s leading experts on the natural rate of interest, or the real short-term interest rate that would be neither expansionary nor contractionary if the economy were operating near its potential. Williams believes the natural rate of is currently very low and will likely stay that way for some time. The real natural rate, according to Williams, was in the 2.5 to 3.5 percent range for major economies for most of the 1990s, but it now hovers around zero for the United States and below zero in the euro area and Japan. He notes that the decline in the natural rate owes to a number of secular factors, including changes in the global supply and demand for funds, shifting demographics, slower trend productivity growth, and a general global savings glut.

“The critical implication of a lower natural rate of interest,” says Williams in a recent essay, “is that conventional monetary policy has less room to stimulate the economy during an economic downturn, owing to a lower bound on how low interest rates can go.”

To address the problem, Williams has suggested a new orthodoxy for monetary and fiscal policy solutions. This new orthodoxy would expand unconventional monetary policy tools, including asset purchases and negative rates; create monetary policy frameworks that target either higher inflation rates or nominal GDP growth; increase long-term growth potential through targeted and scaled capital spending on infrastructure, education, and research; and make fiscal policy more countercyclical, including through changes to tax policy and federal grants to states.

Numerous indications suggest that this new combined monetary and fiscal policy strategy may be on the horizon. In the United States, both presidential candidates are touting programs that feature significant infrastructure spending in 2017 and beyond. In Japan, policymakers are announcing fiscal stimulus while simultaneously flirting with the use of helicopter money*. More broadly, a lower natural rate implies a slower baseline path of rate increases in coming years and a greater likelihood that a broader array of unconventional tools will be needed during the next recession. I fully expect elements of this new policy orthodoxy will be implemented, over time, here in the United States, as well as in Europe and Japan. The reality is that as low as rates are around the world, we now have leading regional Fed presidents updating their outlooks suggesting that the natural rate of interest is much lower than expected. Investors need to accept that ultra low short- and long-term rates will likely be with us through the rest of this decade and possibly beyond. We live at a time where the unthinkable has become common.

Many policies implemented since the financial crisis would have been perceived as highly unorthodox or impossible to maintain just a decade ago. Clearly policy makers are beginning to shift the direction of future policy. This will be a major topic at the upcoming Jackson Hole Symposium where Fed Chair Janet Yellen will make a seminal speech. The outcome of this discussion will set the policy stage for years to come and impact the future direction for markets in the coming decades. Policies implemented in the near-term may be thought extreme by market participants today, but they will likely become commonplace in the emerging policy orthodoxy of tomorrow.

The natural rate of interest is the real federal funds target rate that would be neither expansionary nor contractionary if the economy were operating near its potential. A model estimate of the natural rate—developed by Thomas Laubach and John Williams, currently President of the San Francisco Fed—has fallen sharply since the crisis and stands only slightly above zero. A lower natural rate implies less need for policy to tighten and a greater likelihood that policy measures now considered unconventional will be employed in future cycles.

WHY IT MATTERS: Income Inequality

Peasant-Wedding-Bruegel-the-ElderMy Comments: I’ve argued frequently that if income inequality is not addressed, our children and grandchildren will be rioting in the streets of America. I’ve also argued that the recent rioting in Louisiana, and elsewhere, ostensibly because of racial issues, is as much caused by economic disparity as it is racial disparity.

At the extreme, in the Middle East, the rise of ISIS is as much an economic issue as it is a religious issue. If there are no jobs for young men and women to aspire to and become the economic foundation of a family, one is left with strapping on a suicide vest and causing chaos.

We better hope the next round of elected leaders in Washington and elsewhere pay attention to this problem.

By Josh Boak – August 18, 2016 –

WASHINGTON (AP) — THE ISSUE: The rich keep getting richer while more Americans are getting left behind financially.

Income inequality has surged near levels last seen before the Great Depression. The average income for the top 1 percent of households climbed 7.7 percent last year to $1.36 million, according to tax data tracked by Emmanuel Saez, an economics professor at the University of California, Berkeley. That privileged sliver of the population saw pay climb at almost twice the rate of income growth for the other 99 percent, whose pay averaged a humble $48,768.

But why care how much the wealthy are making? What counts the most to any family is how much that family is bringing in. And that goes to the heart of the income-inequality debate: Most Americans still have yet to recover from the Great Recession, even though that downturn ended seven years ago. The average income for the 99 percent is still lower than it was back in 1998 after adjusting for inflation.

Meanwhile, incomes for the executives, bankers, hedge fund managers, entertainers and doctors who make up the top 1 percent have steadily improved. These one-percenters account for roughly 22 percent of all personal income, more than double the post-World War II era level of roughly 10 percent. One reason the income disparity is troubling for the nation is that it’s thinning out the ranks of the middle class.
___
WHERE THEY STAND
Hillary Clinton has highlighted inequality in multiple speeches, with her positions evolving somewhat over the past year. Bernie Sanders held her feet to the fire on that subject in the primaries. Clinton hopes to redirect more money to the middle class and impoverished. Clinton would raise taxes on the wealthy, increase the federal minimum wage, boost infrastructure spending, provide universal pre-K and offer the prospect of tuition-free college.

Donald Trump offers a blunter message about a hollowed-out middle class and a system “rigged” against average Americans. Still, he has yet to emphasize income inequality in the campaign. To bring back the factory jobs long associated with the rise of the middle class, Trump has promised new trade deals and infrastructure spending. But Trump has also proposed a tax plan that would allow the wealthiest Americans to keep more of their earnings.

WHY IT MATTERS
President Barack Obama has called rising inequality “the defining challenge of our time.” And experts warn that it may be slowing overall economic growth. Greater inequality has created a festering distrust of government and of corporate leaders whose promises of better times ahead never fully materialized.

The result has been a backlash against globalization that many Americans feel tilted the economy against them. For the top 1 percent, the ability to move money overseas and reach markets worldwide concentrated pay for “superstars,” according to economists. At the same time, factory workers now compete with 3 billion people in China, India, Eastern Europe and elsewhere who weren’t working for multinational corporations 20 years ago. Many now make products for Apple, Intel, General Motors and others at low wages. This has depressed middle-class pay. These trends have contributed to a “hollowed out” labor market in the United States, with more jobs at the higher and lower ends of the pay scale and fewer in the middle.

Social factors have amplified the trend as well. Single-parent families are more likely to be poor than other families and less likely to ascend the income ladder. Finally, men and women with college degrees and high pay are more likely to marry each other and amplify income gaps.

Trump’s Thin Skin Shows CEOs Are Not Made For Politics

Pieter-Bruegel-The-Younger-Flemish-ProverbsMy thoughts on this: We can argue ‘till the cows come home whether Donald or Hillary is more reprehensible. And we can wonder if the other two national candidates will meaningfully affect the outcome next November.

Donald may indeed be a nice guy, but I’m not ready to cede him the prize as CEO of these United States of America. Because the skill sets necessary to be CEO of the USA are very different from the skill sets necessary for someone to be the CEO of a player in corporate America.

Frankly, I don’t think he has the necessary talent. To borrow a sports metaphor, someone may be a talented and very successful athlete, then become a fantastic position coach in football. But time and again, we see people promoted beyond their ability to be successful. In Gainesville, think Will Muschamp to name just one. I’m casting my vote for the person most likely to be a functioning CEO of these United States for the next four years. There is no do-over once the die is cast; it better be right.

Michael Skapinker, August 10, 2016, in the Financial Times

We need political leaders with real world experience. Too many of those who govern us have never worked outside politics. It is a frequent cry. But if we think business leaders are the answer, Donald Trump, the Republican presidential candidate, is providing a near-daily display of how hard it is to leap from running a business to winning elections.

There are two reasons. First, business leaders such as Meg Whitman and Carly Fiorina, who have both lost elections, did not seem to grasp that holders of political office have less control over events than does a chief executive. While a business boss can hire, fire, acquire and sell, even the US president is hemmed in by the constitution and can be stymied by Congress, as the political economist Francis Fukuyama has noted.

British prime ministers have more executive and legislative power but still have to accommodate rivals who might challenge for their job. The aggravation Tony Blair tolerated from his chancellor Gordon Brown? No chief executive would put up with it for a week, let alone 10 years.

The second and more important reason business leaders struggle in the political fray is that they are unprepared for the criticism, invective and ridicule they will have to endure.

The press does sometimes attack chief executives. Politicians occasionally attack them too. Hauled before legislative committees, they react badly to the kind of questioning a political office-holder expects as a matter of course.

Some respond truculently, as did British retailer Sir Philip Green when asked by a House of Commons committee in June to explain the shortfall in the pension fund of BHS, the chain he ran that has since gone bust. Or they blink into the bright lights of a televised hearing and stumble through their answers — which were the reactions of Starbucks, Amazon and Google executives when questioned about tax arrangements by a UK parliamentary committee in 2012, and US car industry chiefs when congressional inquisitors demanded to know why they had flown to Washington in their private jets in 2008.

Few business bosses know what it feels like to face the vituperation endured by politicians or to be caricatured relentlessly. Steve Bell, the Guardian cartoonist, decided that David Cameron’s shiny pink complexion made it look as if he had a condom over his head — and he drew the former prime minister that way for years. Zapiro, the South African cartoonist, always draws President Jacob Zuma with a shower growing out of his head — never allowing him to forget that while on trial in 2006 for allegedly raping a woman who was HIV-positive (he was acquitted), he said he had avoided infection by taking a shower.

Politicians may loathe these depictions but they have to put up with them. Mr Bell says Mr Cameron once said to him “you can only push a condom so far” — which he wrote on the back of the moving truck in the cartoon he drew last month of the Camerons leaving 10 Downing Street.

Chief executives, by contrast, are surrounded by managers and staff eager to win favour. Talking back to the boss does not get people far. Business leaders become used to the admiration but this can make them thin-skinned when outsiders criticise them. A retired business leader once called to yell at me for writing that he couldn’t take criticism.

Politicians’ press officers try to bully critics too but those who successfully run for public office know they often have to let the brickbats sail by.

Any political leader could have told Mr Trump not to attack Megyn Kelly, a Fox News female television presenter, by saying she had “blood coming out of her eyes, blood coming out of her wherever”. A sensible politician would have responded to criticism from the parents of a dead US Muslim soldier by saying how much he respected their sacrifice, rather than suggesting, as Mr Trump did, that the soldier’s mother had been prevented from speaking at the Democratic convention.

Few chief executives are as abusive towards their detractors as Mr Trump. Even fewer speak as recklessly or pick as many fights. Many will, rightly, object to being likened to him. But he is just an extreme example of the narcissistic boss who, once in the public arena, is incredulous that people dare to criticise him.

The Real Economy Trumps Republican ‘Dark Ages’

coins and flagMy Comments: If I’m guilty of a ‘liberal media bias”, so be it. As an economist and financial professional for the past 40 years, I think I know how to read the tea leaves of global economic reality. They say our economy is relatively solid. Unemployment is low and growing. Corporate earnings are OK, if not spectacular. The stock market is overvalued, but that has little to do with the economy. The major existential threat to our future economic well being is the income inequality that is now pervasive in our society. That has to be remedied, and remedied soon. But if you think it will happen in a Trump administration, I’ve got some lovely home sites I can sell you just east of Daytona Beach.

07/25/201 by Harlan Green

Marketwatch’s Jeff Bartash is just one of our economic journalists busting the Donald’s ‘Disstopian’ views (Maureen Dowd’s term, not mine). Our economy is doing incredibly well for most people, including the bottom of the economic ladder—whose incomes are being helped by the rise of minimum wages in many cities and states, and maybe nationally if Hillary takes the White House.

The number of Americans who applied for unemployment benefits last week fell by 1,000 to 253,000, matching the second lowest level of a seven-year-old economic expansion that shows no signs of flagging, says Bartash. And get this. Claims have been below the key 300,000 benchmark for 72 weeks — the longest such stream since 1973 — and show no sign of rising. The weekly report has a track record of being one of the best indicators at predicting several months in advance if the economy is headed toward expansion or recession, says Bartash.

Barron’s free market economist Gene Epstein doesn’t see any economic trouble on the near horizon, either. “I share the view that the government does far more to destabilize the economy than stabilize it,” he said. “With all that said, however… Armageddon is not about to happen. In fact, economic growth in 2016 could even show a pickup from 2015’s dismal rate.”

Actually, it’s because of government action, in the face of congressional inaction, that we are doing so much better than most of the rest of the developed world. It’s because of the stabilizing influence of our United States of American government. For instance, we are doing much better than the Eurozone because our centralized government and financial system enables retirement income and other benefits—so-called government transfer payments—to flow to the poorest states (almost all red and Republican leaning, by the way) from the wealthiest, thus preventing a Greek-style financial debacle.

So who is the Donald talking to that would believe his Disstopia? It is basically his angry, white primary supporters that continue to fight the US Civil War, as I’ve said. For to generate such fear and loathing of minorities and ‘other’ ethnic groups and races, Donald has to offer them up as scapegoats, much as Hitler’s Germany did to harness and heighten their anger—to which he has added Hillary and the Washington establishment.

Even banking giant Morgan Stanley, part of the Wall Street establishment, sees no coming Disstopia. Their economists believe this economic recovery could last until 2020—that is 13 years from the official end of the Great Recession in June, 2009, which would bust Bill Clinton’s record 10-year recovery.

Some of the reasons given are the U.S. added about 200,000 jobs a month in 2015, its second-best year of employment gains since 1999. And such labor strength and is buoying consumer confidence, a powerful force in an economy that is mostly driven by consumer spending. The University of Michigan’s consumer sentiment index averaged 92.9 last year, the highest since 2004. That’s a big improvement from the 2008 low of 55, says Morgan Stanley.

Home sales are also soaring, with existing plus new-home sales now topping 6 million units, a nine-year high. Also, consumers have been fixing their balance sheets. Morgan Stanley notes that the amount of debt relative disposable income has come down a lot. It currently stands at about 106 percent, down from 135 percent in 2008.

The flip side is that corporations are hoarding their record profits, instead of spending much towards future growth. Morgan Stanley expects the ratio of capital spending-to-sales at S&P 1,500 companies to slip to 4.6 percent by the end of 2016, excluding energy and utilities. Whereas capital expenditures stood at 6 percent and 9 percent before the last two recessions.

Capital spending is down for governments, as well, which is why we have a deteriorating infrastructure that is at least 75 years old. Government hasn’t stepped up to the line to fill the void, as it did during the New Deal. Millions of new jobs would be created when and if those deferred public works’ projects will be done.

And many of Donald’s blue collar supporters would benefit. The bottom line is without someone to blame, Disstopian Donald has no issue. We could even have the longest economy recovery on record, longer than Bill Clinton’s 10 years from 1991 to 2001 that resulted in 4 years of budget surpluses.

Harlan Green © 2016

This Stock Market Rally Is Going To Fall Apart

roller coaster2My Comments: Another brick in the pile that says we’re headed for a market correction. A major clue is called the price to earnings ratio or P/E. It’s a readily available metric that helps understand relative valuations. The Shiller CAPE ratio is today recognized as the better measurement of market valuations. Currently, it is almost 63% higher that it’s historic mean. That comes back to a statistical law called reversion to the mean. What goes up also goes down.

Bob Bryan Aug. 4, 2016

A common refrain around the markets and economy is that expansions don’t die of old age. But that doesn’t mean they can’t still get a bit weary.

The recent run-up in stocks to an all-time high comes in the eighth year of the current bull market, making it the second-longest such market in history. Given the bull market’s “old age,” this recent upswing isn’t going to last very long, according to Jonathan Glionna at Barclays.

Glionna, head of US equity strategy research, argued in a note to clients on Wednesday that while the recent stock surge has come on the back of strong economic data, it is not enough to push the market higher over the long term.

The strategist came to this conclusion by analyzing three previous late-stage rallies since 1980 — 1988 to 1989, 1998 to 1999, and 2006 to 2007 — and identifying three conditions that are needed to make them sustainable. They are:
1. Increasing profit margins. Profit margins in each of the past three late-stage rallies hit new cycle highs in order to sustain the rally. This time around, margins have been on the decline since the third quarter of 2014, and even with a recent bounce in aggregate profits, a new cycle high seems unlikely.
2. Growing dividends. In each of the past three occurrences, dividends from S&P 500 companies have been increasing at a rapid pace. “Fast and accelerating dividend growth was present throughout each of the last three prolonged late-cycle rallies,” Glionna wrote. “But, dividend growth has begun to slow. We project a 6% increase in dividends for the S&P 500 in 2016. This is the lowest growth rate since 2010.” Additionally, forecasted growth for the next year is just 4.5%, showing a clear slowing pattern.
3. Increasing leverage. This one is happening, according to Glionna, but it may not have much more room to grow. “While this may be a sustainable amount given the easy conditions and low rates in high grade credit, the days of accelerating growth in borrowings are likely in the past, in our view,” Glionna wrote.

“This is because some important measures of debt sustainability, such as the ratio of debt-to-EBITDA are already elevated.” Essentially, companies are running out of room to borrow more.

Each of these three trends is a sign that companies could continue to grow more in the future. Since the stock market is essentially an investment on future expected growth and earnings, then higher profits, income from dividends, or growth through leverage would inspire investor confidence.

With each of these trending in the wrong direction, investors are less likely to assume that the future of a company is going to be brighter, which in turn means the stock price is less likely to increase. Thus, investors stay out of the market, and there goes the rally.

As we have mentioned before, it’s fair to point out that past cycles may not necessarily be predictive of the current one, and a lot has changed in the markets and economy since the financial crisis.

However, past occurrences are many times all we have to predict future events. And right now, the past isn’t saying anything good.

The source article can be found HERE.

The 19 Most Productive Countries In The World

My Comments: Computers and the internet have been the major drivers of worker productivity across the planet over the past three decades. Here in the USA, we think of ourselves as being the best and throw scorn on anyone who suggests otherwise. And like with so many things, we don’t let facts get in the way. These facts suggest we’re OK, but so are a lot of other countries.

Will Martin,  Jul. 24, 2016

Productivity is one of the key drivers of economic success. The more productive a country’s workers are, the more value they can bring to their employers and therefore their home nation’s economy.

New research from business-to-business marketplace Expert Market has shed some light on where in the world people are the most productive. Expert Market compared data from 35 of the world’s biggest economies before compiling their ranking.

To do this, they looked at the GDP per capita of nations and divided that by the number of hours worked per person, giving a rough guide to which nations make the most money in the least amount of time, and are therefore the most productive.

Numbers quoted below are the amount of value each worker brings to their country’s economy per hour worked. Check out the ranking underneath:

See all 19, ranked in reverse order, here:

Why Interest Rates Are Lower Than Ever

Piggy Bank 1My Comments: Please keep reading…

Paul J. Lim,  July 6, 2016

If you think the financial panic over Brexit is over — because stocks have bounced back somewhat from their initial sell off — think again.

As scared investors continue to seek shelter in boring government bonds, fixed income prices have soared while yields on 10-year Treasury securities plummeted to as low as 1.34%, marking the lowest levels ever seen in U.S. history.

In early morning trading Wednesday, yields bounced slightly to 1.37%. But that’s a far cry from the 5% yields on 10-year Treasuries before the global financial crisis.

Overseas, the situation has gotten even worse: 10-year German and Japanese bonds have sunk further into negative yield territory, which means investors are so concerned about the economy that they’re willing to pay officials for the right to park their money with the government.
Aren’t record low rates a good thing?

Normally, investors crave low interest rates because cheap borrowing costs encourage spending and capital investments, which fuel economic activity and growth. Low rates also offer relief for debt-laden governments and consumers, who can now refinance existing loans at better terms.
But ultra-low interest rates can also be a sign that investors are so worried about stagnation or recession that their primary focus is on the safe return of their capital—that is, making sure they can simply get it back—not earning big returns on their capital.

The uncertainty caused by Britain’s unprecedented move to leave the European Union has fueled fear over what’s to come for the global economy. And in times of fear, investors generally flock to bonds, which drives up their prices and drives down their yields. (Market interest rates move in the opposite direction of bond prices.)

Less than two weeks after the vote, economists have already been ratcheting down their expectations for growth overseas. IHS Global Insight, for instance, now believes the gross domestic product among countries in the Eurozone will grow just 1.4% this year and 0.9% next year. Before Brexit, the economic research firm had been forecasting Euroepean economic growth of 1.7% this year and 1.8% in 2017.

How scared should you be?

It’s far too soon to tell if the U.S. is also headed for negative rates. But one thing is clear: The so-called “yield curve” is flattening out. And that normally spells trouble for the economy.

The yield curve refers to the spectrum of rates paid by Treasuries of various maturities. Normally, longer-dated Treasuries — such as 10- or 30-year bonds that require investors to tie up their money for extended periods of time — pay substantially more than short-term debt, which poses less risk.

Yet when fear over the economy bubbles over, investors tend to flock into long-term bonds, driving down long-term yields. And when that happens, the gap between what short- and long-term bonds are paying decreases and the yield curve “flattens.”

Ed Yardeni, president and chief investment officer at Yardeni Research, points out that the spread between yields on 10-year and two-year Treasuries is the flattest it has been since November 14, 2007. Indeed, the spread between 10-year and two-year yields is down to just 0.8 percentage points. A year earlier, it was roughly double that.

Why is this important? Because Nov. 14, 2007 was just two weeks before the start of the 2007-2009 recession that coincided with the global financial crisis.

If the yield curve actually inverts — meaning 10-year Treasuries start paying less than two-year Treasuries — it’s virtually certain that the economy is in or headed for recession.

If the economy is so scary, why are stocks doing reasonably well?

That’s a good question. IHS Global Insight economist Patrick Newport points out that “the seemingly contradictory demand for stocks given the rally in bonds is likely driven by the perception that the Federal Reserve will further delay raising rates in the wake of the Brexit vote, making stocks more attractive in terms of returns.”

Income-oriented investors, who’ve been frustrated by the paltry yields being paid by bonds, may also be driving this trend.

Back in the early 1980s 10-year Treasuries were yielding 10 percentage points more than the dividend yield on blue chip U.S. stocks, notes Jack Ablin, chief investment officer at BMO Private Bank. “Nowadays that gap has disappeared and then some,” he said. Indeed, today, the dividend yield on the S&P 500—what you get for holding the stocks above and beyond stock price appreciation—is more than half a percentage point higher than what 10-year Treasuries are paying.

This trend could persist and stocks could keep rising for months on the strength of income investors. The problem is, if the bond market is right and the economy is this weak, eventually the stock market will get the message too.

My delayed comment: there is a sizeable number of people in this country who are convinced we are in the ‘end of days’ scenario which I think is patently stupid. But constant talk about this assumed chaos can be a self-fulfilling prophecy when leadership elements keep pushing and pushing. But it makes no sense economically.