Aca

"We were in a 'risk on' mode, with equity markets rising and bond markets falling, based on the idea that the economy was looking rather better than feared and that the Europeans had averted complete disaster with the Greek deal. But that story was already looking shaky when today, the Chinese PMI came in at a disappointing 48.1, the European composite PMI fell to 48.7 and the UK's retail sales dropped 0.8% in February."


"When the government dis-saves, of course, it spends more than it takes in. That spending either goes on goods and services (bought from the corporate sector) or is paid to workers or benefit recipients, and is then spent on goods and services. (Before you leap to comment. of course repeated deficits mean higher taxes later on, but that doesn't affect profit margins now.) Profits are 10.2% of US GDP, and the deficit is 7.6%, so one can roughly (very roughly, as there are many offsetting factors) say that the deficit is responsible for three-quarters of profits."