Faced with evidence that corporate profits, industrial production and stock markets are signalling a recession ahead in the US, this Wall Street Journal (WSJ) journalist is looking for arguments why this time is different! If oil sector misfortunes should be excluded from corporate profit and industrial production trends, then were they excluded when the mining sector was booming? Did analysts warn that the index was simply too rich and expensive, if one excluded the oil sector profits boom? Second, if oil undermined corporate profits and industrial production, was it not supposed to elevate consumer spending?
How little we change! Will the Fourth Industrial Revolution make a difference to our attitudinal and pathological weaknesses in reason and thinking?
Greg Ip of WSJ blasted away on his laptop that the market panic was incongruent with economic reality. I would like to know whether he wrote too that the market euphoria of the previous six years was incongruent with either economic growth reality or corporate topline reality.
Another WSJ article that has a wrong header: ‘Why has the Fed spooked the stock market?’. Wrong question to ask. The right question to ask would have been: ‘Why did the Fed put help the stock market to spike?’. An overly expensive market only needs excuses and not real reasons to correct.
A breath of fresh air and common-sense thinking. Tracy Alloway excerpts from the investment newsletter of Jeff Bahl, former head of US high yield trading at Goldman Sachs. Now, he is a portfolio manager at Bahl & Gaynor. The full letter is here.