ALBERT EDWARDS: 'We are at that stage in the cycle where I begin to doubt my own sanity'

Albert edwardsSociete GeneraleAlbert Edwards

Most US economic data missed expectations in February.

And that investors are sending stocks to all-time highs is making Societe Generale’s Albert Edwards crazy.

In a note Thursday, Edwards wrote:

“With equity markets galore hitting record highs clearly I must be missing something big! We are at that stage in the cycle where I begin to doubt my own sanity. I’ve been here before though and know full well how this story ends and it doesn’t involve me being detained in a mental health establishment (usually).

From Janet Yellen’s testimony on Capitol Hill earlier this week, Edwards points out that the Federal Reserve is being patient and data-dependent so that it doesn’t “risk the economic recovery.”

“Investors are transfixed instead by the Fed and when it will tighten rates and can’t see the wood for the trees. The Fed’s focus on payrolls, a lagging indicator, is most perplexing but not unusual at this stage in the cycle. The reality is that the vast bulk of economic, as well as earnings, data (even outside the energy sector), has been simply dreadful.”

Here’s a chart he included that illustrates the disconnect between the economic data and the stock market.

In Edwards’ table of economic “misses” and “beats” this month, all but five of nearly 40 data released this month were above expectations.

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