"To be clear, we do believe that we are currently in a recession." - Lakshman Achuthan
Lakshman Achuthan on cyclical bull markets vs. recessions in the past.
"If you look over the past 15 recessions, in three of those you had a cyclical upturn in stocks straight through the recession. This is 1980, 1945, and 1926-1927, the roaring twenties. So it is possible for there to be a cyclical upturn in stocks even though there is a recession."
Achuthan on how the Federal Reserve moves the stock market higher (via QE3) but doesn't really do much for the economy.
"You've had four years of pretty extraordinary Fed action, and you can't point to a lot of traction in our work on the actual economy. I mean it may be impacting markets, but it doesn't look like it's impacting the economy. We are in a situation where the velocity of money, which is kind of how the Fed impacts the real economy, is plunging (see recent chart). So this is the proverbial pushing on a string. They may do something even more extraordinary, but the problem is you are getting diminishing returns."
He says to watch out for economic data revisions.
The link below from March 2012 is the most recent interview I have with Lakshman Achuthan on my blog: ECRI's Achuthan Says 2012 Recession Call Still Stands (CNBC, 2/24/2012).