Thursday December 20, 2018 Market/Inflation - by Jeff Caughron
Eye poppers: Stocks down over 600pts again. Crude oil down another $2.27 Inflation expectations are collapsing (see Fed’s breakeven 5yr below). As Stan Druckenmiller pointed out:
- Corporate non-financial debt has exploded since 2010… up 60% from $6 trillion to $9.6 trillion.
- Overall corporate earnings are up 27%, but S & P earnings are up 60%... so
- Borrowed money and tax cut windfall went to finance buybacks
The asset-price bubble in the last cycle was housing… this time it's stock price inflation. QE created too much liquidity and late-stage fiscal policy was ill-advised. Now the chickens are coming home to roost.
Fed’s Five Year Breakeven Inflation Rate: 2013 – Today
Posted on Thu, December 20, 2018
by Jeff Behymer