Many wonder why the crescent moon is prevalent in so many Arab/Islamic country flags. First of all, in a desert country, life is lived at night. Secondly the crescent moon is awaited each year to kick off the holy month of Ramadan. The crescent moon arises and the month begins.
I grew up thinking about this shape right along side the communist’s sickle. Always left a bad thought in my mind. Actually, I never knew what it was. So, there you go...a step toward understanding…and world peace.
The austerity measures imposed in Europe rhyme a bit with the austerity that the Arab world puts themselves through during Ramadan. They neither eat nor drink nor smoke nor have sex from sunrise to sunset…they break their “fast” in a celebretory feast called an Iftar, each evening.
The Fed, on the other hand threw a party yesterday and nobody came. They accomplished a bit of technical “easing.” But, that is now very tough to do with interest rates at zero. However, they did try for the following reasons… and many others. Let’s hope something grabs hold here economically.
The job losses this time around have been staggering in a post WWII perspective. Shrinking our way to profitability continues in corporate America. Lowering headcounts, wages and bonuses has been enough to offset top line declines. As explained graphically below, the latest profit recovery (the three red dots) is very reliant on declining labor costs-more than ever before.
The profit recovery is and has been very, very reliant on sustained low real wages. Arguably, GDP “growth” taken out of the savings of impoverished laborers only impoverishes further the impoverished and the profit growth from it will be short lived going forward. This “profit growth” should really not demand much of a P/E multiple and I think is reason to steer clear of US equities at this juncture.
May you have a great weekend with those you are fond of.
Blessings,
Leon
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