Eric Sprott has penned his latest newsletter,"It's the Real Economy, Stupid," a lucid look at the real economy versus the market's optimistic pricing in of positive sentiment. Sprott says the market is ignoring the facts:
It begins with:
We are now in the early stages of a depression. The economic indicators we follow to track real economic activity are all signaling a slowdown of massive proportions. You wouldn't know it reading the mainstream papers of course - they all focus on the relative decline in the slowdown's intensity. Reading about the slowdown ‘slowing down' is not the same as growth however, and does not warrant excitement in our opinion.
Our title this month paraphrases one of Bill Clinton's presidential campaign messages from 1992. As one of the three key themes in Clinton's campaign, "The economy, stupid" was printed on a sign in his headquarters in Little Rock to help campaign workers stay on message. This month we're keeping it simple by focusing on the real economy and its implications for the stock market.
And ends with:
In our view, the only thing propping this market up is investor sentiment. Earnings have not improved. Keep it simple, stupid - investing is and has always been about the real economy, and this market is ignoring the hard data. You can invest in sentiment if you want to, but as we have said before, we prefer to invest in real things.
In a nutshell, the emperor has no clothes. Click here or on the image below to download complete newsletter.
