The flood of fiscal and monetary liquidity has driven equity prices up to all-time highs. This liquidity has resulted in prices becoming detached from economic reality, according to the IMF.  

Is the recession over? Not hardly says the IMF.

The chart below shows the IMF continues to downgrade its estimate of global growth this year.

The IMF is predicting a global recession this year that is magnitudes worse than anything we have experienced in the last 40 years. See below.

Is it any wonder why the IMF cautioned (in the text below chart) about the disconnect between market sentiment and economic reality. You think this slowdown might eventually show up in earnings?

The below chart comes from a Bloomberg article by Eric Martin.

Global Recession Deepens

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Global Recession Deepens

The IMF significantly downgraded their global growth projections based on their leading indicators. In our second chart, we review the leading economic indicators (LEIs) from the OECD.

Economic Cycle Indicator-U.S.& Global

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Economic Cycle Indicator-U.S.& Global

This chart shows that the outlook has improved from April to May, but remains in very concerning territory. Remember, the LEIs are supposed to reflect the outlook for the next 6-9 months. LEIs above 100 indicate economic expansion. We are clearly in contraction territory right now.