NEGATIVE REAL RETURNS OVER THE NEXT 10 YEARS

No matter how you cut it, stocks are overvalued by double historical averages and are poised to deliver negative real returns over the next ten years. With 10 Year Treasuries yielding 2.7%, they are also poised to deliver negative real returns over the next ten years. No place to hide, as proven by John Hussman’s chart of doom in his latest article Double Trouble.

Of course the paid spokesmodels and Wall Street shysters blathering on CNBC assure you all is well as noted by Hussman.

Needless to say, Wall Street wishes investors to believe that valuations are just fine, and one can hardly watch CNBC for 10 minutes without some reference to stocks being “cheap on forward earnings.” The fact is that the errors of those models can be predicted in advance from the level of profit margins at the time of the forecast. The higher the level of profit margins, the more these models tend to overestimate future returns, compared with how stocks actually perform in the following years. The glib confidence placed in these models in 2000 and 2007 is enjoying a full – and likely tragic – revival at present.

If you were wondering why the two BLS employment surveys were off by 525,000 jobs in January, with the boobs on CNBC grasping at the higher figure as proof of economic recovery and reason to ramp the stock market, look no further than the standard “ADJUSTMENT” by the BLS drones to the tune of  adding 523,000 jobs they had supposedly “missed” over the prior 12 months all lumped into one month. How precious. Hussman describes the process.

One of the seemingly confusing aspects of Friday’s employment report was the increase of 638,000 jobs in the household survey, which contrasted with the rather disappointing 113,000 jobs in the more widely followed payroll survey. What many of the talking heads called a troubling difference can be explained by a footnote in the report from the Bureau of Labor Statistics: “household survey data for January 2014 reflect updated population estimates.” The civilian labor force itself was revised higher by 523,000 individuals.

No Virginia, there is no jobs recovery, just data manipulation by the government and spin by their MSM mouthpieces.