Readers may recall that last month the third quarter real growth number was raised to 4.1%, which is quite high. Market economists and pundits believed this number, and said that it signaled an accelerating recovery. You may also recall that I said at the time that the revised third quarter number was a meaningless blip, and that the outlook for growth and employment remained bleak.
Not to readers of this blog.
I hope it didn’t come as too big of a shock to the economists at DoL that it was cold in December. Are they aware that it could be cold in January and February too? They can improve their forecasts by consulting the Farmer’s Almanac.
If you don’t buy my “Yellen wins” scenario, then you should expect falling bond yields and some negative earnings surprises. With NGDP growing at around 3%, the outlook for topline growth is modest, and post-recession productivity gains are almost exhausted. Supporting stock prices is strong free cashflow funding continued buybacks--instead of wealth-destroying M&A. Animal spirits in the boardroom are always bad for stockholders--even in Omaha.