Zombie Economy Soon to Have its Zombie Epocalypse

This past Thursday marked the one-year anniversary of the US stock market’s death when stocks saw their last high. Market bulls have spent a year looking like the walking dead. They’ve tried to push back up to that distant high that means new life several times, but each time the market falls into a pit again to where the market is once again lower than it was a year ago.

These are the last gasps of a stock market (and economy) that is struggling to rise again, which it simply cannot do now that QE has been turned off and the oxygen tank of zero interest is being slowly turned down.
Thursday’s anniversary of that last (now very distant) market high was no cause of celebration. Stocks jolted downward again — nearly a hundred points on the Dow. If you bought the market indexes a year ago and just sat on your investment, you’d be 4-5% poorer today. Yet, some still call this a “bull market.” The zombie bulls just don’t know they’re dead.
  • Earnings growth for companies in the S&P 500 has shrunk for three quarters in a row.
  • The bulls are back to their one-track obsession with the Fed as being the only real money in town.
  • Since the close of 2014, delinquencies in commercial and industrial loans have spiked 124% to reach a point higher than they were in 2008 when Lehman Bros. crashed.
  • Delinquencies in agricultural loans in the US right now are in equally bad shape.
  • Caterpillar slumped into global decline for 41 consecutive months.
  • The Fed hasn’t been able to raise rates again to save its sorry soul.
  • China is teetering on collapse, and its president now says, let the bankruptcies happen; stop propping the economy up with debt.
  • The S&P 500 staged one of its most dangerous flags — the dreaded “death cross.”
  • The Silicon Valley real estate bubble has burst.
  • Billionaire George Soros has dialed back his U.S. stock investments by more than a third while banking on gold.
  • Soros’s former chief strategist, billionaire investor Stan Druckenmiller, is also bullish on gold: “Higher valuations, three more years of unproductive corporate behavior, limits to further easing and excessive borrowing from the future suggest that the bull market is exhausting itself.
  • And last week a write-down of Puerto Rico’s $70 billion debt default became reality as Republicans and Democrats joined on a plan.
Bonds have become a zombie economy, too, and the Fed has become the parade master of the walking dead. Stocks slobber and bonds drool over the chuck-holed street that could have been fixed as a stimulus work project with the money that went to boost banks.
—David Haggith –