Episode 178: Friday the S&P500 rose above its 200dma for the first time this year; however, I remain cautious and expect the market to move lower. I believe the past month of optimism was founded on rising oil prices, but it’s unlikely that oil has bottomed because global growth remains stagnant. The problems with growth won’t be resolved by negative interest rates in Japan and Europe; on the contrary, negative rates reveal how deep the problem is.
Anemic growth in developed democracies can best be summed up using Europe’s death spiral formula: 7/25/50. Europe has 7% of global population (in decline); 25% of wealth (in decline); and 50% of welfare spending.
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