Instead envision the recovery resembling a check mark (think Nike swoosh):
This is consistent with the historical analogues we discussed last month the Great Depression and Japan’s Lost Decade(s), although in both of these cases the ‘tail’ (recovery) extended beyond a decade.
The Congressional Budget Office recently revised their estimate for Real Output (GDP) and employment, and they expect both to recover within the next several years:
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| Source: Congressional Budget Office |
Both society and the markets are ripe for turmoil over the next several years. The Cold War with China and civil unrest will flare on and off possibly even conflagrating into a civil or world war. This instability will manifest itself in market turbulence.
Currently massive stimulus is blunting the painful reality that the economy (and some institutions) are broken. For these reasons I am very bullish in the near-term. Like a trauma patient given large doses of potent painkillers, we enjoy a respite from pain; but expect an arduous recovery.
This report reflects the current opinion of the author. The report is based upon sources believed to be accurate and reliable. Opinions and statements about the future expressed in the report are subject to change without notice. The report is not a solicitation or an offer to buy or sell any security. .