On Alert, Not Alarm

Apparently central banks and politicians have not done enough to help the global economy recover according to, Christine Lagarde, IMF Managing Director, in a speech at Frankfurt’s Goethe University where she called for stronger action by the world’s economies, suggesting downside risks were increasing.

“Let me be clear: we are on alert, not alarm. There has been a loss of growth momentum”.
Ms. Lagarde’s concern helps explain the shift by some central banks to negative interest rate policy (NIRP) and more recently talk of “helicopter money”.  (Seeking Alpha, April 5, 2016)

Remember the 2008 tax rebate checks? That is an example of helicopter money, money that bypasses the banks and lands directly in consumers’ pockets.  The path is set.  This is where we should expect to be headed.

Meanwhile, apparently the best case we have for a stronger recovery according to Bob Doll, Chief Equity Strategist at Nuveen Asset Management, are summed up with his positives outweigh the negatives summary (Financial Advisor April 5th, 2016):

• Dovish comments from Janet Yellen suggested a slow pace of interest rate increases and helped push stock prices higher.
• We expect relatively weak first quarter corporate earnings results, but believe conditions should improve later this year.
• Despite some near-term risks, we have a positive long-term view toward equities.

Sorry, but those are pretty lame and generic reasons to be bullish.  Yes, the Fed continues to be able to inflate the market with policy speak.  True, earnings may be in contraction so stocks could rally on an expected recovery during the second half of 2016 but what is the catalyst?  And who on Wall Street doesn’t have a positive LONG-TERM view of stocks?

Meanwhile U.S. Treasury Bonds rally which is why they can be a great tool for managing portfolio risk and provides a real assessment of what the market thinks about the current situation.

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