By John Morgan at Newsmax
The huge valuation gains in stocks during the current bull market have nothing to do with an honest marketplace, and the cheering on Wall Street is bound to be replaced by tears, according David Stockman, White House budget chief during the Reagan administration.
Stockman estimates fourth-quarter S&P 500 earnings are actually down 5 percent from the year-ago period, but there has been little mention of that fact in media coverage.
"That's because the talking heads invariably reference 'adjusted' or 'ex-items' earnings, which, almost by definition, exclude charges for every imaginable business mistake and bonehead executive action — such as soured M&A [merger and acquisition] deals and 'restructuring' expense — that could possibly cause earnings to go down," Stockman wrote on his Contra Corner blog.
According to GaveKal Capital, signs of distress in the U.S. economy are starting to accumulate.
GaveKal compared a recent decline in the bellwether durable goods orders figures against the Citigroup Economic Surprise Index, which it uses to track all economic data.
"The moving sum peaked in February 2014 and has been declining since. In looking back over the last 10 years, we've never seen such a big divergence in the direction of these two series," GaveKal said on its blog.