I analyze macroeconomic issues from a fundamental perspective, and I analyze market behavior from a technical perspective. Original macroeconomic analysis can be found here and both macro analysis and commentary can be found on my Caps blog. If you like or appreciate my analysis, please add yourself to my Following List

Thursday, June 21, 2012

Warren Mosler: Macro Take

Fantastic interview with Warren Mosler. He discusses QE, earnings, cash flows, demand leakages, and the potential fiscal cliff.

I completely agree with his take that current levels of deficit spending are still sufficient to maintain aggregate demand (and hence corporate revenues and profits) to a level that is 'good for stocks'. I don't think we are seeing a 'major top' in the stock market. I think the real risk to the stock market and the economy is the *potential* 'fiscal cliff'. But as I said here at the beginning of June this would be the mostly widely telegraphed macro event ever. And like Mosler says, I am highly doubtful that is being 'priced in' to stocks right now.

Which means that I think the current pullback since May (and that we are still potentially in) is a correction and the cyclical bull market will continue, not the start of a cyclical bear market.

Early Thought follow up… A conversation with Warren Mosler

Please click on the link below to listen to a conversation with Warren Mosler. Topics include: Demand leakage (how to fix end-demand), Fed Policy (QE is counterproductive) and overall market/econ outlook for US, Europe and China.

Warren Mosler Interview Audio
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