Juggling Dynamite

On Tuesday, the International Monetary Fund cut its global economic forecasts to 3.3% for this year and 3.8% next, citing primarily slower growth in key developing nations as well as a deepening recession in the Eurozone. The IMF also noted that federal spending reductions in the U.S. were weighing on the recovery.

IMF chief economist Olivier Blanchard joined MoneyBeat to discuss the global economy, the threat of China’s credit crisis and whether Europe can get itself out of its debt crisis:

“…there isn’t anything else right now that can pick up the slack of China and the other emerging markets…you have to realize, this is the mother of all crises…the way out is far from obvious.”Here is a direct video link.

Ahead of the FRONTLINE premiere of “Two American Families,” Bill Moyers explores how middle class families are surviving.

Twenty-two years ago, Bill Moyers started documenting the story of two ordinary families in Milwaukee, Wisconsin — families whose breadwinners had lost well-paying factory jobs. Relying on the belief that hard work is the key to a good living and better life, the Stanleys and the Neumanns, like millions of others, went about pursuing the American dream. But as they found other jobs, got re-trained, and worked any time and overtime, they still found themselves on a downward slope, working harder and longer for less pay and fewer benefits, facing devastating challenges and difficult choices.

Here is a video link.

Equity analysts are perpetually bullish–except at the bottom of recessions where they notoriously capitulate to the recency effect and forecast a continuing plunge in earnings just as sales turn up. As a result, equity analysts are as utterly useless as mainstream economists (also incapable of forecasting recessions) in helping anyone anticipate market cycles.

As companies have repeatedly lowered their revenue and earnings guidance over the past 2 years, analysts have lowered their expectations in lock step. Today this trend continues, with companies issuing negative revisions at a record 6.5:1 compared with any positive revisions. The story of economic bell weather Alcoa reveals a typical pattern over the past 2 years: in January 2012 management (and therefore analysts) were forecasting Q2 2013 earnings per share of 7.20, which was ratcheted down month after month and quarter after quarter to just .06 a share by June 2013. This ensured that Alcoa could then “beat” earnings by announcing Q2 earnings this week of .07 a share (a beat! but 99% lower than had been expected 2 years ago). Global GDP forecasts have been following a similar staircase down over the past 2 years even as US stock markets have run wild on QEphoria.

This video report offers some reality check for those that like facts: Earnings growth target dips to 2.9%-Thomson Reuters Harrison. Here is a direct video link.

For those who prefer fantasy and gambling on increasingly horrible odds. The S&P 500 is looking fantastic at present levels.

Chart source: Cory Venable, CMT, Venable Park Investment Counsel Inc.