Juggling Dynamite

To recap:  some $15 trillion in central bank liquidity injections (blue line below) helped drive record share buybacks and the price of US stocks this cycle (S&P 500 in red) to all time highs on most historically relevant valuation measurements into the fall of 2018, before prices plunged into year-end on hawkish central banks, weakening financial conditions and slowing growth worldwide.  Since then stocks recovered sharply into April, as central banks promised to pause hiking plans and stop reducing the bank assets held on their balance sheets.

At the same time, global demand– industrial production (left in orange) and retail sales (in blue)–remains lower and stagnant since 2017.  See Chart shows glaring economic risks that could wipe out record highs.

While the year-over-year Citi Data Change Index (in blue below since 2005) which leads the 12-month S&P 500 forward earnings cycle (in orange) by 26 weeks has ignored the bounce in stocks and suggests earnings should continue to decline at least into August.

Stock owners today are either speculating that earnings and global demand cycles are no longer relevant to prices in a world of low rates, attentive central banks and (now waning) corporate buybacks, or they are betting global demand and revenues will suddenly turn higher, support record earnings multiples, and manage to push stock prices perpetually higher still.

Only one thing is certain:  gamblers run out of luck eventually and those without a cash-out rule typically lose more than they ever won.

Denying and discounting fossil fuel impacts on climate and water systems is one thing, ignoring toxic air is harder to do.  Air pollution made in China and other developing nations does not stay within national borders, of course.  On planet earth, we are all “Under the Dome.”

Smog in China is shortening lives. It got so bad that air pollution was said to have become the main cause of social unrest. The government’s response has been massive, with billions of yuan of investments in clean energy, but there’s still a long way to go. Bloomberg QuickTake explains how China is scrambling to clean its air. Here is a direct video link.

When powerful special interest groups are allowed to write preferrential laws for themselves and their industries, damaging public policy is the norm evident in most countries today.

Each year, state lawmakers across the U.S. introduce thousands of bills dreamed up and written by corporations, industry groups and think tanks.

Disguised as the work of lawmakers, these so-called “model” bills get copied in one state Capitol after another, quietly advancing the agenda of the people who write them.  See:  Copy, paste, legislate

USA TODAY and the Republic found at least 10,000 bills almost entirely copied from model legislation were introduced nationwide in the past eight years, and more than 2,100 of those bills were signed into law.  Here is a direct video link.