Without question Guggenheim’s Scott Minerd is a pundit worth listening to. He and I aren’t always on the same page, but he is smart, experienced, thoughtful and, above all, objective.
Here are his thoughts on the, to some, perplexing present state of the U.S. equity market:
“There are 2 possible explanations for divergence between stock prices and the real economy. First is the economy will rebound much faster than many expect. This looks highly unlikely as it could take at least four years for economic activity to return to levels seen in Q4.
More likely explanation is that stock appreciation is explained by the Marshallian K, where liquidity exceeds nominal economic growth and spills over into asset bubbles just like in the Internet bubble, the housing bubble, and the corporate debt bubble. More bubbles to come.”
Yes, no question in my view, we have a very dangerous bubble in corporate credit, and, as a consequence of policymakers
aversion to preempting such phenomena penchant for promoting such phenomena, we have one in equities as well…
See this week’s video commentary for a dive into the current market setup and general conditions…