How QE Perverted Our Economy and the Generational Spending Wave

When showing people my Spending Wave chart, I now must do so in two phases: the first with the market correlation to the 46-year lag for peak spending before the idiotic, insidious, irresponsible QE phenomenon took flight, and the second one after.

This is the second phase with the markets highlighted in yellow after QE (aka ‘Quickest Egress’ from reality)…

SQE Perverts Spending Wave: Markets on Crack 31-01-19

Source: Dent Research, Bloomberg

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Look what those damned central bankers did to my beautiful chart!

And worse, what they’ve done to our economy and free-market system!

The Spending Wave was my first breakthrough indicator in 1988 and, until March 2009, it was the best tool for projecting the economy and stock markets.

It is that fundamental.

It’s based on people driving our economy, not BS politicians who are rewarded for giving free lunches today and kicking the can down the road.

The markets are now just over double what they should be by my most fundamental indicator.

And this final bubble has occurred in the worst recovery in history on all counts: real GDP, wage growth, productivity and capital spending.

And then, the Donald adds major corporate tax cuts when major businesses are enjoying the highest profits in history as a percent of GDP…and when they have more capacity than they need.

That’s how they created this unprecedented stock bubble out of a financial crisis and a weak recovery…

EPS Grows 119% and Stocks 93% More Than Profits 31-01-19

Source: St Louis Federal Reserve

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The biggest driver of stock prices

The biggest single driver of stock prices is growth of earnings per share, and these central bank schmucks figured how to goose that.

So, here’s the summary:

  • GDP (not adjusted for inflation) grew a measly 44% since 2009.
  • Profits grew an astounding 175% (thanks to ultra-low borrowing and interest costs).
  • Earnings per share (EPS) grew an even more staggering astounding 384% (119% more than profits because companies used cheap money and free tax cut cash flow to buy back their own stock and restrict the shares to lever up).
  • Stocks grew a little less than EPS, at a mind-blowing 338%.

It’s like magic: now you see it, now you don’t. We see the miraculous effects of QE now. In the blink of an eye, it could all be gone.


Harry Dent,
For The Rum Rebellion

Harry Dent is an economic realist. His market predictions and strategies, as well as his general views of the economic and political state of the world, are based solely on his own knowledge.

And, as a Harvard University MBA graduate and Fortune 100 consultant, it’s not as though he’s lacking in this resource. But if experience isn’t enough to convince you, perhaps his accuracy is. In 2017, Harry Dent was making calls about the Australian property market that are coming into play as we speak.
And yet, the media portrayed him as ‘crazy’.

At The Rum Rebellion, this sort of biased, inaccurate media that isn’t accepted. Dent and his fellow editors aim to give you the information you should know, rather than what the media wants you to know. Dent believes in facts and facts alone when forming an opinion, and such is The Rum Rebellion mission.

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