Readers of this space know my fondness for The Leuthold Group’s research. Whenever the Greenbook arrives (so called because of the color of its cover), I typically find interesting facts, observations and/or opinions. (Oh, full disclosure: I own LCORX, its core fund.)
The December issue did not disappoint. In his monthly column, “Inside the Stock Market,” Doug Ramsey,the firm's CIO, asks, Where is the economic crisis?
“Four years ago, political and media worrymongers sunk to an all-time low with threats of ‘pass TARP or else!’ . . . We’d hoped that low point in herd behavior --- like lows in stock prices seen just a few months later --- would never again be revisited, but it’s now clear we’ve been proven at least half wrong. Yes, the mainstream media frenzy over the ‘Fiscal Cliff’ certainly established an even lower bar . . . with the investing public effectively being ‘TARP’ed’ on a daily basis.
“The worst development in the deficit reduction process (which --- many forgot --- has been ongoing for three years) was that a name and date were attached to it. And it is perfectly appropriate that the Fiscal Cliff term itself was coined by the foremost fearmonger of our era: Fed chief Ben Bernanke, who’s pulled every imaginable scare tactic out of the bag in rationalizing his extension of the crisis-based monetary policies three-and-a-half years into an economic expansion. Where is the crisis in the set of statistics below?
· S&P 500 up 12% YTD through December 4; MSCI AC World Index (which lagged badly in 2012 and 2011) up 11%.
· Real year-over-year GDP growth of +2.5% through the third quarter.
· U.S. civilian unemployment rated down a full percentage point to 7.9% in the latest 12 months.
· Nonfarm payroll employment 1.9 million higher than a year ago (1.4% growth).
“These stats might surprise readers still dazed by their daily media TARP’ing, and we don’t blame them. If the national mood is this dour during what (in many empirical ways) has been a ‘good’ year, we worry what new depths it might reach during the next recession and accompanying bear market. (And we worry how, with no ‘conventional’ arrows left in its quiver, the Fed might respond to it.) Ironically, then, while we’re busy bashing the worrymongers, we’ve become one.”