In a post-crisis world awash with monetary stimulus, the performance of the actual global economy has been an afterthought. In fact, signs of a weakening economy have proven beneficial to stocks, because it raises investor hopes for additional stimulus. But at some point, the stock market will have to go out on its own without the crutch of monetary liquidity injections, and will instead, have to rely on the support of actual economic fundamentals. In fact, such a baton is currently in the process of being passed in the United States, as the Federal Reserve remains intent on raising interest rates. With this in mind, it is worthwhile to explore how the global economic outlook is really shaping up. And if the materials sector is any meaningful guide, the outlook may not be so good.
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