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Steady As She Goes
As you can see from chart #1 below, U.S. bank loan growth has been rather weak. Those that expect an economic acceleration this spring and summer are quite likely to be disappointed, just as we who expect weakness have and continue to be. It is bank loan growth that creates money supply growth (note chart #2), which is necessary for expansion. It is just not there. Money supply in fact has been declining since 2012. If history is any guide, this will take its toll on economic activity. One needs to keep in mind, money trends have long lead times—sometimes very long.
I thought the following Crestmont Research chart (chart #3 below) might give one a reasonable ten-year total return outlook for the S&P 500 index. Dividend growth, earnings growth, and price earnings change are the three components of total return pure and simple—and that’s it. If any of you want a copy of the Crestmont Research Paper one needs to visit their website at www.crestmontresearch.com. Their most recent paper can be found by clicking on this link. I have made reference to them before. Ed Easterling is a friend and one of the really good people in this business.
Adapted from zerohedge.com
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