Morgan Stanley and Goldman Sachs see only global strength ahead…what? the risk sellers see no signs of a downturn? Surprise, surprise…
Bloomberg’s Simon Kennedy reports on the global economy and the risk of a recession. Here is a direct video link.
The downside of using QE to ‘stimulate’ risk assets far above global growth the past 4 years, is that it only worked on the assumption that global growth would catch up and justify the high prices. With the global economy weakening, not strengthening today, the over-valuation in asset prices grows more garish by the hour.
Many finance types today say they are confident that stock markets will continue to rise because they do not see a recession ahead. [The sell side, never does, but that aside.] In saying this they are ignoring the fact that high stock and high yield debt prices are the strongest evidence bulls point to of an economic “recovery” the past 5 years. Once prices recouple again with true global growth trends (that are much lower), the evidence of the much touted recovery evaporates as well. In other words, once the veneer of rising asset prices is removed, an enduring recession will be self-evident.