Friday, January 15, 2021

Tag: False Reading: The Fed’s Equities Light Is “Green” But the Economy Is Crashing

False Reading: The Fed’s Equities Light Is “Green” But the Economy Is Crashing

by Charles Hugh Smith, Of Two Minds:

Sadly, as markets stall and crash, participants will still be in their seats thinking all is well.

The tragic 2009 crash of Air France Flight 447 offers an apt analogy for the global economy and central bank-driven false signals. Flight 447 entered an area of frigid turbulence over the Atlantic which caused the air-speed sensors (pitot tubes) to ice up. A few minutes later, the autopilot disengaged, and the co-pilot flying the aircraft over-corrected in the turbulence.

Deprived of accurate airspeed readings, the co-pilot misjudged the situation and attempted to climb, causing the aircraft to stall. Unable to recover, it crashed into the Atlantic, killing all on board.