Quote of the Day: Must Read!

RealVision's Roger Hirst echoes our message herein regarding the economic outcome should the powers-that-be succeed in keeping asset prices buoyed during what is the worst recession since the Great Depression:

"We have to have in our framework the idea that we could get to S&P 4,000 and be in a recession; the two not mutually exclusive. But if we do get to 4,000 on the S&P, my view of the future growth of the U.S. economy would be reduced, because what that's telling me is it's a massive misallocation of capital away from productive capacity toward asset prices. And, particularly, the zombification of corporates that would've normally gone under during a recession of this type every time prior to 2008."

Here's yours truly on the topic of Fed intervention 2 days before the market peaked and rolled over to the tune of ~35%:

"So many problems inherent in economic/market pain-avoidance: Resource misallocation, moral hazard, zombie companies, economic stagnation, on and on…

Of course recessions are painful, and as I’ve illustrated ad nauseam of late the next one will have to clear a massive mess in corporate debt -- making it a doozy. But, frankly, it’s necessary if we are to preserve any semblance of “free” markets and the growth, the dynamism, the opportunities, the lessons, etc., they engender…"

By the way, Hirst's base case is that stocks will indeed reflect economic reality before the current recession plays itself out...