The recent bounce in equities raises a number of important questions.
- Is global growth slowing? (Even the IMF seems to think so.)
- Can central planners bend or smooth economic gravity? (Nope. Just ask the BOJ or ECB...)
- Will a sustained rally in the price of oil send stocks higher? (Iran says it's unlikely.)
With none of these concerns truly abating, let's put the recent "rallies" in perspective. Here are five charts of key indexes, the respective drawdowns from the 2015 and the necessary returns just to get back to breakeven. This should raise a few red flags. Bear in mind, we're not even addressing the myriad recessionary data points here.
Russell 2000 down -16% since July.
To get back to breakeven must be up 19%.
https://twitter.com/KeithMcCullough/status/709300264889688064
South Korea's Kospi Down -12% since April.
To get back to breakeven must be up 14%.
https://twitter.com/KeithMcCullough/status/709304722163941376
Germany's DAX down -19% since April.
To get back to breakeven must be up 23%.
https://twitter.com/KeithMcCullough/status/709306284714160128
Italy's FTSE MIB index down -21.3% since July.
To get back to breakeven must be up 27%.
https://twitter.com/KeithMcCullough/status/709307189027016704
CRB Index of commodities down -26% since May.
To get back to breakeven must be up 35%.
https://twitter.com/KeithMcCullough/status/709308581523419136