David Rosenberg of Gluskin Sheff details the need to look beyond the stimulus induced rebound (which has been rather remarkable in its speed) and to focus on the more probable secular environment that we will need to live with:
We are in a post-bubble credit collapse environment. The transition to the next sustainable bull market and economic expansion is likely years away. The most notable “non-confirmation” signpost for this bear market rally in equities is the 3-month Treasury bill yield, which is just 13 basis points away from zero. This could be Japan all over again.
His concern is that all the recent news / market recovery will be taken as a true economic recovery. As such, the fear is the stimulus that has accounted for as much of this growth, will be unwound too soon. Back to David:
The global economy is being held afloat by rampant fiscal stimulus, which is accounting for all of this year's growth rate and 80 pct of next year's. This is very much like the 1930s when the pace of economic activity was in need of major stimulus. The sharp downdraft in the equity market and the steep recession in 1937-38 after the government had the temerity to remove the life support fully eight years after the initial shock is case in point.