Papa Powell Sees “Tremendous Human and Economic Hardship” (No V-Shaped Recovery)

The Great Recession

Jerome Powell burst the stock market bubble by publicly acknowledging there will not likely be a “V”-shaped economic recovery. He indicated that it will take years for the economy to return to the recent levels … we experienced just a mere four months ago.

Seeking Alpha

That was actually the point of my recent article that unfortunately became, in the comments, all about my disclosure and not about the article’s theme. So, I’d like to go back to that theme, now that even Fed Chair Jerome Powell supports it at the market’s expense.

The Fed now having set the expectations that rates will remain at least at zero … has inadvertently revealed a major gap in narrative: That of a V shaped recovery presumed by markets and a Fed signaling with zero rates through 2022 that there is no V shaped recovery in the offing, rather a protracted high unemployment environment that is entirely inconsistent with market valuations north of 150% market cap to GDP.

Northman Trader

If headlines about COVID-19 resurgence had not become the rage so quickly again, only two weeks into reopening in most states, and if the country were not sinking quickly into renewed civil war so quickly, exacerbated by police appearing to shoot a fleeing Black man in the back three times in Atlanta (though the guy did turn to shoot the police with a taser he stole from them), I would still anticipate the superficial good news of reopening will feed the “V” narrative and fuel stupidity even higher for the biggest blow-off top in Fed-fueled history … until the narrative failed.

In fact, the irrational exuberance is running so hot, it still might survive all of that … for a little while longer. However, as Lance Roberts writes,

Read the rest here:

Start the Conversation

Your email address will not be published. Required fields are marked *